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U.S. hotel profits reached 52% of pre-pandemic level in 2021

U.S. hotel profitabilityGross operating profit for U.S. hotels reached 52% of the comparable 2019 level, according to STR‘s full-year 2021 P&L data release.    

Strong holiday demand in both November and December helped overall profitability levels, with December showing 2021’s highest recovery index in each of the key metrics.

“Though the industry still has a way to go on the path to full recovery, a lot of headway was made in 2021,” said Raquel Ortiz, STR’s assistant director of financial performance. “Each passing month we saw revenues and profits continue on a positive, upward trend. Profit margins were relatively strong throughout the year, remaining close to pre-pandemic levels. Better margins largely stemmed from lower expenses, due to lower demand and a lack of groups and meetings, while other lifts came from cuts in-room service, more online customer service, and lower employment levels. Labor costs, which were a large concern even before the pandemic, will continue to put pressure on the bottom line.”

Each of the major markets landed in positive GOPPAR territory for the year, led by popular beach destinations such as Miami and Tampa. Markets that rely heavily on business demand, such as San Francisco/San Mateo, still have more ground to cover in terms of reaching pre-pandemic GOPPAR and TrevPAR levels.

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Key profitability metrics:
TRevPAR – Total revenue per available room
GOPPAR – Gross operating profit per available room
EBITDA – Earnings before interest, income tax, depreciation, and amortization
LPAR – Total labor costs per available room

Tags: EBITDA, Hotel profitability


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