Improvement in Group Business Boosts U.S. Hotel Revenue and Profits
According to the 2023 P&L data from CoStar, the growth in group business, particularly in the Top 25 Markets and upper-upscale chains, has driven the increase in U.S. hotel revenues and profits.
Positive Trends in the U.S. Hotel Industry
The hotel industry in the United States has witnessed positive growth in various performance metrics in 2023 compared to the previous year. The following per-available-room metrics for 2023 highlight this growth:
– Gross Operating Profit Per Available Room (GOPPAR): $75.83 (an increase of 8.2 percent)
– Total Revenue Per Available Room (TRevPAR): $211.49 (an increase of 9.6 percent)
– Earnings Before Interest, Taxes, Depreciation, and Amortization Per Available Room (EBITDA PAR): $53.05 (an increase of 7.6 percent)
– Labor Costs Per Available Room (LPAR): $71.56 (an increase of 13.2 percent)
Claudia Alvarado Cruz, the senior analytics manager at STR, states that the total industry revenues and profits have surpassed the levels seen in 2022. This growth can be attributed to the pricing power that outweighed the impact of softer leisure demand. A significant rise in corporate demand has led to notable improvements, especially in upper-upscale brands and major markets. For instance, New York City experienced a remarkable 47 percent growth in GOPPAR.
Impact of Group Business on Hotel Performance
The improvement in group business has played a vital role in driving the growth of U.S. hotel revenues and profits. Among the Top 25 Markets, 14 reported double-digit increases in GOPPAR, indicating the positive impact of group bookings on hotel performance.
Alvarado Cruz notes that F&B (Food and Beverage) labor costs on a per-occupied-room basis showed the largest growth among all departments in 2023. Additionally, banquet and catering revenues per occupied room increased by 13 percent, reflecting the improvement in group business. While F&B revenues saw a year-over-year increase of 9.1 percent, it remained lower compared to 2019 when adjusted for inflation.
LSI Keywords: Growth in Group Business Drives U.S. Hotel Revenue and Profits per CoStar Data
– Hotel industry growth
– U.S. hotel revenue and profits
– CoStar 2023 P&L data
– Group business impact on hotel industry
– Top 25 Markets performance
– Upper-upscale brands and major markets
– Pricing power vs. leisure demand
– Corporate demand increase
– New York City’s GOPPAR growth
– F&B labor costs and revenues
FAQs: Frequently Asked Questions
Q: What is CoStar?
CoStar is a data provider that offers comprehensive insights and analysis for the commercial real estate industry, including the hotel sector. Their P&L data provides valuable information on hotel performance and financial metrics.
Q: How does group business affect hotel revenue and profits?
Group business plays a significant role in driving hotel revenue and profits. When hotels receive bookings from large groups, such as corporate events or conferences, they can fill a substantial number of rooms, generate additional revenue from F&B services, and potentially negotiate more favorable rates. This increased demand leads to higher occupancy rates, higher average daily rates, and ultimately, improved financial performance.
Q: Which markets witnessed the most growth in hotel profitability?
Among the Top 25 Markets, 14 reported double-digit increases in GOPPAR (Gross Operating Profit Per Available Room). New York City stood out with a remarkable 47 percent growth in GOPPAR, indicating significant improvements in hotel profitability.
Q: How did F&B labor costs contribute to the overall growth?
In 2023, F&B labor costs on a per-occupied-room basis showed the largest growth among all departments. This suggests that hotels invested more in their F&B teams to cater to the increased demand from group business. The growth in banquet and catering revenues per occupied room further emphasizes the positive impact of group bookings on F&B operations.
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