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Global hotel profits perk up, just not in Europe

Global hotel profits perk up, just not in Europe
Global hotel profits perk up, just not in Europe
Written by Harry Johnson

For Europe, February was another in a string of profitability pain

  • Gross operating profit per available room in the U.S. turned positive in February
  • Favorable data in the U.S. could not be duplicated in Europe
  • Europe continues to be hampered by country-to-country COVID-related lockdowns

The U.S. hotel industry was in need of a month like February. For Europe, it was another in a string of profitability pain.

In a turnaround from previous months, gross operating profit per available room (GOPPAR) in the U.S. turned positive in February and at $10.82, it was 675.5% higher than in January. Though the jump into positivity after eight of the last 10 months being negative was cause for celebration, GOPPAR in February is still 89.5% down over the same time a year ago.

In step with the boost in profit was a jump in both rooms and total revenue. RevPAR was up $14 over January to $50.81, while TRevPAR increased nearly $20 to $73.81. Occupancy in the month nearly closed at 30%, which would have been the highest mark since March 2020. The 7-percentage-point rise in occupancy month over month was coupled by a jump in rate to its highest level since last March.

As revenue ticked upward, expenses remained muted. Total labor on a per-available-room basis was $33.13, which is 67.1% lower than at the same time last year and less than $2 up on last month.

Undistributed departmental expenses remained depressed across the board YOY, including utilities, down 22.9%. Total overhead costs were down 49.6% YOY.

Profit margin was recorded at 14.7%—its highest level since last February and only the third time in 12 months that the KPI was positive.