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A year after the hotel industry collapsed, guests – and performance – trickle back

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.

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. According to HotStats, 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.

U.S. Pickup
U.S. 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.

Europe’s Halting Growth
In Europe, performance continues to lag other global regions, as COVID-19’s impact on the continental population has not yet fully loosened its grip.

Occupancy remained below 20% in April, and with average rate only up $8 since the same time a year ago, RevPAR only hit $16, which, though 225% higher YOY, is still wildly off from its pre-pandemic level, down 85.5% from April 2019.

With TRevPAR still muted at $28.85 in the month, and expenses creeping back as properties reopen, hotels suffered the ignominy of negative GOPPAR for the seventh consecutive month.

There is good news on the horizon for Europe: an agreement by the European Union to relax travel restrictions from those outside the bloc. Ambassadors from the 27 EU countries agreed to ease the criteria for non-E.U. nations to be considered a “safe country,” from which all tourists can travel. Up to now, that list consisted of only seven nations: Australia, Israel, New Zealand, Rwanda, Singapore, South Korea and Thailand.

The proposal would be a shot in the arm for European tourism, after the number of foreign visitors dropped by 70 percent in 2020.

China Ride
April was another month of continued success for Asia-Pacific’s hotels, but an upsurge in COVID cases could dampen performance. Occupancy in the month remained above 50%, as RevPAR surged to a level 241% higher than at the same time last year.

As total revenue remained steady, so, too, did GOPPAR, which at $25.80 was up 276% YOY.

Asia-Pacific’s overall performance has been buoyed by China, where occupancy hit close to 70% in April, at or near historical levels. In the month, GOPPAR reached $41.78, which is less than $4 off its April 2019 level. And there is still room for improvement. While domestic business aircraft travel in China has recovered by a reported 95%, international charter activity is still sitting at less than 20 percent.

Middle East Stays the Course
The Middle East stayed on a positive performance path with GOPPAR levels in April 357% higher than at the same time a year ago.

Total revenue was at its highest peak since February 2020, boosted in part by ancillary revenue, such as F&B RevPAR, which hit $37.75 in the month, a 375% improvement on April 2020.

Meanwhile, labor costs are creeping back with total labor PAR hitting $38.59 in the month, a 36.3% YOY increase. Still, labor costs remain some $20 down versus pre-pandemic historical levels.

Summer months are some of the region’s slower months from a demand perspective and could damper the region’s overall recovery.

News Editor - TravelDailyNews Media Network | + Posts

Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.

She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.

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