The middle of summer brought better hotel performance data than STR has recorded since the COVID-19 pandemic started in the U.S.
(STR is the parent company of Hotel News Now.)
Gross operating profit margin was positive for the first time since March, and more U.S. hotel markets are now realizing positive gross operating profit per available room (GOPPAR).
Full-service hotels finally able to break-through to profitability
For the first time since February, full-service hotels were able to show positive GOPPAR in July. Although this was only GOPPAR of $3, it’s a long way from the days of -$25 GOPPAR. Moreover, full-service hotels started to break even at around 40% occupancy, and 46% of these hotels showed positive GOPPAR. In terms of net income, 30% of full-service hotels were profitable. Limited-service hotels do continue to outpace full-service in terms of GOPPAR, but both continue to show incremental improvements each month.
GOP declines highly correlated with room counts
Analyzing the July P&L data, we stumbled upon a very interesting relationship between number of rooms in a hotel and GOP year-over-year change. In more than 65% of hotels, the more rooms there are, the more negative the GOP year-over-year change. Thus, for each additional room a hotel has, it essentially lost $3,330 in GOP from last July. While that seems extreme, the GOP loss has improved since May.
All class segments now showing positive TRevPAR and GOPPAR
All classes showed positive GOPPAR in July for the first time since February. The luxury class had the highest total revenue per available room (TRevPAR) of all classes for the second month and improved TRevPAR by $26. In June, the luxury class had only a slightly higher TRevPAR than the economy class ($5 higher), but this month it was $43 higher. However, the economy class still has the highest GOPPAR of all classes at $23.