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A year after hotel industry collapsed, guests are trickling back

A year after hotel industry collapsed, guests are trickling back
A year after hotel industry collapsed, guests are trickling back
Written by Harry Johnson

Global hotel industry’s performance is improving, but it’s still ways away from the pre-pandemic era.

  • US hotel profit has moved in the right direction since the beginning of the year
  • In Europe, performance continues to lag other global regions
  • Middle East stayed on a positive performance path with GOPPAR levels in April 357% higher than at the same time a year ago

April 2020 was not for the faint of heart. The month will live in infamy for the global hotel industry, which saw the bulk of its key performance indicators swoon to unprecedented levels, an unfortunate by-product of the COVID-19 vapor. The subsequent 12 months have been a slog, but as the world transitions slowly back to a semblance of normalization, hotels are following suit.

In sum: Performance is improving, but it’s still ways away from the pre-pandemic era.

US Pickup

US hotel profit has moved in the right direction since the beginning of the year, around the time when it first started to break even. As the country’s phased reopening continues, expectations are that the hotel industry will benefit.

In April, GOPPAR was at its highest level since February 2020. At $35.45, it was up 235% over the same time a year ago.

The uptick in profit came on the back of growing rooms revenue and total revenue, as demand strengthened. After occupancy was in single digits back in April 2020, it has climbed considerably since, underpinned in particular by the leisure traveler as group and corporate business continue to flag. Leisure travel was almost 50% of total traveler mix in April, a 22.9 percentage point uptick over the same time a year ago.

TRevPAR in the month hit $116.04, a 752% year-over-year increase, and $15 higher than March.

Labor continues to be a struggle for hotels. More than 200,000 jobs were reportedly lost in the franchise lodging sector, representing a 33% drop in employment. A new bill introduced in Congress, The Save Hotel Jobs Act, looks to provide assistance to the hotel industry, both for workers and hotel owners.

Total labor costs on a per-available-room basis hit $41.76 in April, the highest mark since the pandemic. As a percentage of total revenue, labor costs have come down slightly as revenues rebound.

Profit margin in April was 30.6%, the same level as the previous month.