HotStats: Hotel profits continue decline through April

If March was a brutal month for the global hospitality industry, April was arguably worse. In the latest report from HotStats, David Eisen, the company’s director of hotel intelligence and customer solutions, described the drop in global hotel revenue and profit performance for the month as “vertiginous.” 

Cities and entire regions around the world remained shut down throughout April, which drove gross operating profit per available room down by triple digits in previously strong markets. Hotels in the U.S. reported GOPPAR declines of 122.8 percent, Europe was down 131.9 percent, Asia-Pacific dropped 124.1 percent and the Middle East reported declines of 115.3 percent.

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“The global hotel industry unsurprisingly has a demand problem that has not yet abated and will linger for months to come, at least until customers and companies feel safer to travel,” Eisen told Hotel Management, acknowledging that hotel brands are doing ”all they can” to create a safe, clean environment for guests.
“While it’s early in the rebound process, and regions such as the U.S. and Europe continue to feel the sting, we are upbeat to see some seeds of improvement in countries like China, where revenue and profit indicators have risen month-to-month, beginning in March and carrying into April. The hotel industry’s recovery will be measured in baby steps, but at least it’s upright.”

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April’s occupancy was “abysmal,” the report said, with an almost 50 percent year-over-year drop in average room rate leading to a 95.2 percent year-over-year decrease in revenue per available room. The revenue decline, combined with nearly no food-and-beverage gain, resulted in total revenue per available room dropping 95 percent year over year.

In New York, the epicenter of the COVID-19 pandemic in the U.S., new cases started declining toward the end of the month—”a trajectory that continued through May,” the report noted. New York City hotels reported GOPPAR decline to -$50.60, a 145.7 percent drop over the same time last year.

HotStats April U.S. Numbers
Photo credit: HotStats

According to the American Hotel & Lodging Association, some 70 percent of hotel rooms were empty across the U.S. as of May 20 while thousands of hotels closed completely. In open hotels, operators have significantly scaled down operations by closing some floors and meeting spaces and suspending F&B outlet operations. While many variable costs have been removed, the report noted, some fixed costs remain that are not impacted by fluctuation in occupancy or sales. As a result of scaled-back operations, total overhead costs were down 66.6 percent year over year, while total labor costs dropped 73.5 percent year over year. All undistributed expenses were down double-digit percentages year over year.

Cost savings, however, did not cushion profit. For the second consecutive month, GOPPAR turned negative to -$26.34, a 122.8 percent year-over-year decrease and 107 percent greater than March.


Europe’s numbers were “strikingly similar” to those in the U.S. As in New York, new cases are decreasing in the capital cities and the European Union is getting ready to reopen to tourists. (Europe’s tourism industry accounts for approximately 10 percent of all EU economic output, the report noted.) 

A sub-10 percent occupancy and 43 percent year-over-year drop in rate led to a 95.4 percent year-over-year decrease in RevPAR, while TRevPAR dropped 93.2 percent year over year due to the lack of ancillary revenue along with few room sales.

While total overhead costs dropped 59 percent year over year for the month and labor costs fell 70.2 percent, the appreciable amount of lost revenue led to a 131.9 percent year over year decrease in GOPPAR to -€17.80, a second consecutive month of negative GOPPAR and a 113 percent increase over March.

Asia Pacific

While overall Asia-Pacific hotel numbers remained down in April, a glimmer of hope emerged in China.

APAC as a whole had a relatively strong occupancy story compared to other regions, reaching 20 percent for the month. Still, RevPAR was down 83.8 percent year over year and average room rate was down 39 percent year over year.

TRevPAR also suffered, down 83.3 percent year over year amid heavy losses in food and beverage, along with enervated ancillary revenue. F&B revenue fell to $7.85 per available room in April, down 86 percent from January.

Asia-Pacific’s expense story was similar to other global regions. Total overhead costs were down 51.3 percent year over year, while labor costs came down 49.5 percent. Notably, utility expenses were down 54 percent year over year thanks to the lack of energy being consumed. 

GOPPAR for the month was down 124.1 percent to -$13.92, almost $3 more negative than in March.

Though Asia-Pacific as a whole displayed numbers indicative of the time, China, while still in a “soporific state” as the report described it, is trending upward. For the second consecutive month, occupancy rose, up 10 percentage points over March (though still down 44.5 percentage points year over year).

Across the board, key performance indicators saw incremental improvement, including TRevPAR, which showed a 73 percent improvement on March to $30.29.

GOPPAR, meanwhile, is slowly inching its way back to positivity. After a January that saw GOPPAR at $20.70, it turned negative in the ensuing months, starting with $-28.31 in February. However, each subsequent month has improved, with April GOPPAR reaching $-2.57—down 106.2 percent year over year, but a 90 percent increase from February’s GOPPAR total and 75 percent better than March’s total.

Middle East

While Middle East occupancy was close to 20 percent for the month, average rate was still down 32.8 percent, which drove RevPAR down 83 percent year over year. TRevPAR was down 85.4 percent year over year, while GOPPAR was down 115.3 percent year over year.

The holy month of Ramadan (April 23-May 23) did little to improve hotel performance because a partial easing during the holy month led to a spike in infections.

Meanwhile, a more dire picture is emerging from Dubai, where GOPPAR dropped to -$31.29 in April, a 122 percent decrease over the same time a year ago. A recent survey by the Dubai Chamber of Commerce revealed that 70 percent of businesses in the emirate expected to close within the next six months. Dubai, “one of the most diversified economies in the [Persian] Gulf,” is “hyper reliant” on travel and tourism dollars, the report noted. Within the survey, some 74 percent of travel and tourism companies said they expected to close in the next month alone.


The COVID-19 epidemic has “virtually obviated the need for yearly performance measurement,” the report claimed. “Improvement will be measured in baby steps, presenting a clear-cut case for month-to-month comparison as the global hotel industry looks to build itself back up, one hotel opening at a time.” 

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