STR: US hotel profits hit all-time high
STR: US hotel profits hit all-time high
17 MAY 2019 12:41 PM

U.S. hotel industrywide house profit reached $80 billion in 2018 even as labor costs increased at a higher rate than revenues.

BROOMFIELD, Colorado—Results from STR’s 2019 HOST Almanac show that U.S. hotel industrywide house profit reached a record-breaking $80 billion in 2018 even as labor costs grew at a higher rate than revenues.

STR’s HOST (Hotel Operating Statistics) P&L program compiles data from more than 10,000 hotels annually. Those properties comprise more than 2.3 million rooms around the globe.

U.S. revenues topped an estimated $218 billion in 2018, which was an increase of $10 billion from the previous year. Just like the industrywide house profit, the total revenue figure was an all-time high for the industry.

Using a same-story analysis for 4,700 hotels that participated in the HOST program in both 2018 and 2017, total labor costs grew 3.2%, which was below the 4.0% growth levels of 2016 and 2015, but higher than revenue growth for the second straight year.
Overall, gross operating profits (GOP) increased 2.8% on 2.9% total revenue growth.

“Although expenses continued to outpace revenue in terms of growth, 2018 produced stronger profits than expected.” said Joseph Rael, STR senior director of consulting & analytics. “As we’ve noted in recent performance results, maintaining profitability will be a challenge moving forward with flattening occupancy levels, diminished pricing confidence and low unemployment creating a smaller talent pool and higher wages.”

Full-service hotels grew house profit 3.2%, while limited-service properties experienced a slight profit increase of 1.1% from levels achieved in 2017. Among the class segments, Luxury hotels achieved the greatest profit increase (+5.3%), while Midscale/Economy saw a profit decline of 0.5%.

For the fifth year in a row, miscellaneous income (including resort and cancellation fees) led all revenue departments with 11.3% growth, which is the largest increase in miscellaneous income among the last five years.

Top Markets
For the second consecutive year, STR modeled industry profitability for all U.S. hotels to cover industrywide departmental revenues and expenses as well as individual segments and markets. Based on the model, STR estimated total U.S. F&B revenues of $40 billion (up $2 billion from 2017), other department revenues of $7 billion and miscellaneous income of $6 billion. Las Vegas led all markets with nearly $14 billion in total revenue (excluding gaming), while New York City ranked second at $12 billion. Los Angeles, Washington, D.C. and Orlando rounded out the top five with total revenue all in excess of $6 billion.

North America Media Contacts:
Nick Minerd
Senior Director, Communications
+1 (615) 824-8664 ext. 3305

Haley Luther
Communications Associate
+1 (615) 824-8664 ext. 3500

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1 Comment

  • May 21, 2019 2:25 PM Reply

    Please define "house profit." Not in uniform system or in Host. Thank you.

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