SALISBURY, Connecticut—Monthly profit-and-loss data for U.S. hotels further reveals the damage COVID-19 has had on U.S. markets, but weekly performance gains indicate that negative effect is starting to subside, according to Jan Freitag, SVP of lodging insights at STR, parent company of HNN.
In weekly video insights into U.S. hotel data, Freitag highlighted April P&L data released on 29 May, which unsurprisingly was worse than March, he said.
The sharp drop in demand and revenue streams led hotels to cut expenses, but not enough to drive profitability, he said.
Source: STR, © 2020 CoStar Realty Information, Inc.
Earnings before interest, taxes, depreciation and amortization was down 140%, and gross operating profit was down almost 117% from April 2019, which is “really tough to take,” Freitag said.
“When you look at this on a market level, what we’re charting here is the total revenue per available room, and it really shows you how much the U.S. hotel industry, especially the larger markets, have been impacted by (COVID-19),” he said. “For some markets, total revenue per available room is sub-$20.”
Source: STR, © 2020 CoStar Realty Information, Inc.
Additionally, lower revenue results in lower GOP per available room due to fixed costs, he said.
“GOP per available room is actually negative for all the markets surveyed,” he said.
Limited-service hotels, however, showed some positive momentum compared to full-service hotels, he said.
The global picture
Global data across all sub-markets between the week ending 25 April and the week ending 30 May shows a decrease in the number of submarkets that recorded occupancy levels below 25%, while the number of submarkets with occupancy greater than 50% increased from the prior week.
Freitag said that trend is expected to continue.
U.S. occupancy last week was slightly below 37%, trailing China’s occupancy (45.7%), he said, but the “trajectories are clear and upward pointing.”
Memorial Day weekend
Memorial Day in the U.S. resulted in improved RevPAR, Freitag said.
“The data set had an easy comp, as we like to say. RevPAR was … only down 62.1%. (I’m) not sure that we’re going to see an equally strong result, if you want to call it that, next week. In any case, we fully expect that RevPAR declines are going to be better than -70% going forward,” he said.
Weekend occupancy continues to be “very healthy,” he said, which indicates a resurgence in weekend leisure travel.
“That, of course, is not true for all the markets, but not surprisingly, the markets that can be easily reached by car, what we call drive-to leisure markets, saw the highest occupancies last week,” he said. “Unfortunately, continuing to trail are the islands in Hawaii.”
He noted that hotels near interstate highways continue to see the strongest occupancy of all location types. All location types except for urban locations show occupancies greater than 30%.
SpaceX launch
Titusville/Cocoa Beach, Florida, and Melbourne/Palm Bay, Florida, experienced “very good” weekday and weekend hotel demand from to the SpaceX Launch on 30 May, noting both performed better last week than in the same week last year.
“These two submarkets saw year-over-year percent changes, something we haven’t seen in really any data set since the beginning of the year, so certainly good news here,” Freitag said.
Watch the video below for more data insights.
Editor’s note: The video included in this article was filmed by Jan Freitag, SVP of lodging insights at STR, on 3 June and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.