Hotel Profitability Is Up in Most Regions, Except the US

Europe, Asia-Pacific and the Middle East all reported increasingly positive gross operating profit per available room (GOPPAR) during the month of August, according to the latest HotStats data.

Analysts are hoping that this trend across the rest of the globe will prove a favorable bellwether for U.S. hotels, once COVID-19 rates around the country have diminished.

The U.S. is now the only region that hasn’t yet managed to turn a positive profit over a month-long period since the pandemic decimated the worldwide travel industry.
China, which obviously was the first to face COVID-19 and the first to begin bouncing back from its effects, has shown a V-shaped recovery in profit, with its GOPPAR for August 2020 matching its December 2019 numbers. In fact, China’s hotel occupancy rate for August 2020 was just nine percentage points lower than the previous year.

“It’s encouraging to see most regions getting back to positive profitability—albeit small compared to pre-COVID levels,” said David Eisen, HotStats’ director of hotel intelligence and customer solutions, who also authored the research report.

“Obviously, this pandemic has been a global travesty, but if there is one silver lining for the hotel industry, it’s that it could result in hoteliers operating more efficient hotels by paying more attention to expenses than they may have otherwise done when times were good.”

But, while the August trend in terms of positive profits seems promising, hoteliers shouldn’t become overly optimistic just yet, cautioned Hotel Management.

Even under normal circumstances, leisure travel typically takes a downturn in the fall and early winter. On top of which, business travel remains nearly nonexistent, as remote work and online meetings, events and conferences become the new norm.

The seasonal slowdown in travel could take a serious toll on hotel occupancy and revenue rates. On top of which, if another wave of viral infection prompts renewed travel restrictions, border closures and community lockdowns, the industry could find itself right back where it started in the spring of this year.