sample - str.comsource: 2020 str, llc / str global, ltd. trading as str. costar realty information,...

2020HOST AlmanacFor the year 2019

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Source: 2020 STR, LLC / STR Global, Ltd. trading as “STR”. © CoStar Realty Information, Inc. Table of Contents

Reports 2

Same-Store Analysis

STR analyzed same-store growth rates for over 4,200 U.S. hotels that participated in the HOST program in 2019 and 2018. In this analysis, although we did see 1.2% growth in total revenue per available room (TRevPAR), gross operating profits per available room (GOPPAR) was flat for the first time since 2009, when profits declined 28%. Earnings before interest, taxes, depreciation and amortization (EBITDA) also realized a decrease for the first time since 2009. Another area where we saw a decline was in the Other food and beverage (F&B) revenue department, which includes revenues from meeting space facilities, audiovisual equipment and F&B service charges. Since this department is highly dependent on meeting and group demand, which saw decreasing demand in 2019, it realized a 3.4% decline from the previous year.

Miscellaneous Income once again produced the strongest growth of any revenue department for the sixth consecutive year (+14.9%). Fee-based income continues to grow in popularity among hoteliers, especially as it is getting more difficult to grow revenues in the rooms and F&B departments. This was evident in the data as the F&B department realized muted growth in revenues (0.7%), but stronger growth in expenses (1.7%) leading to a profit decline of 1.7%. The rooms department also saw rooms expenses (+1.0%) outpace rooms revenue growth (0.4%), which led to nearly flat profit growth of 0.1%. Other operated departments was another area that realized strong growth in 2019 (+8.5%). This department includes revenues from anything outside of rooms and F&B that has an expense attached to it, such as golf, spa, parking and other minor departments. Since expense growth for these departments was muted, the department realized a profit growth of 34.4%.

2019 U.S. HOST P&L Departmental % Change

Rooms RevenueFood RevenueBeverage RevenueOther F&B RevenueOther Dept RevenueMiscellaneous IncomeTotal RevenueRoom ExpenseF&B ExpenseOther Dept ExpenseDepartmental ProfitA&G ExpenseI&TS ExpenseMarketing ExpenseFranchise FeesPOM ExpenseUtility ExpenseGross Operating ProfitManagement FeesProperty TaxInsuranceEBITDATotal Labor Costs

0.4%

1.5%

-3.4%

8.5%

14.9%

1.2%

1.0%

1.7%

0.2%

1.1%

5.4%

3.6%

0.8%

3.1%

0.0%

2.2%

4.3%

3.4%

-1.3%

3.5%

1.9%

-1.2%

-3.9%

0%

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Reports 3

Most undistributed expense departments realized growth of over 3.0%, with the Administrative & General (A&G) department reporting the largest expense increase of 5.4%, most of that coming from labor. Information & Telecommunications Systems (I&TS) and Utilities were the only two undistributed expense departments that realized declines of 3.9% and 1.2%, respectively. Property taxes showed relatively muted growth in 2018, but were once again on the rise in 2019 with the second-largest expense increase of 4.3%. This suggests properties are once again being appraised at higher values, which in turn is driving up property taxes. Insurance expense continued to grow for the third year in a row (3.4%) as premiums continue to rise for hoteliers. Total labor costs grew 3.5% in 2019, which is slightly less of an increase compared with the previous year, but still at a rate much higher than revenues.

While full-service hotels were still able to grow GOPPAR slightly (+0.9%), limited-service hotels realized a 3.8% decline from 2018 levels. This was because limited-service hotel revenues declined 0.6% and most departments saw expense increases over 2%. Further breaking down the data by class segments, you can easily see that all segments struggled to drive revenues in 2019, but continued to see expenses grow. The Luxury class segment was the only one to show a meaningful profit increase for the year (+3.9%), with most other classes showing profit declines. After reporting profit increases in 2018, both the Upscale and Upper Midscale class segments saw decreases of 2.4% and 4.4%, respectively. The Upper Midscale class also realized the largest decline in EBITDA that we have seen in several years. Labor costs continued to grow across all class segments with the highest growth in the Upscale segment (+4.4%).

2019 U.S. Hotel Profit % Change By Class

Luxury

Upper Upscale

Upscale

Upper Midscale

Midscale/Economy

RevPAR TrevPAR Department Profit

GOPPAR EBITDA Total Labor (LPAR)

1.8%2.7% 3.3% 3.9%

4.1%

3.8%

-0.3%

0.5%1.1% 1.4% 0.3% 3.4%

-0.2%

0.4% 0.1%

-2.4%

-4.3%

4.4%

-11.7%

0.6%

-2.6% -1.9%-3.5%

-6.5% -7.3%

3.5%

-1.3% -1.0%-2.3%

-4.4%Sample


Reports 4

Mapping Profitabilityby Claudia Alvarado C., Analytics Manager

The slowing growth in GOP (gross operating profit) continued in 2019 across the 165 STR-defined U.S. markets. Roughly 50% of markets reported a decrease in GOP, whereas five years ago, only 18% of the markets experienced a profit decline.

Four of the nine STR-defined regions also realized GOP growth. The South Atlantic region saw the strongest growth at 4.3%, closely followed by the East South Central and Mountain regions at +3.5% and +3.2%, respectively. The latter was the only region that maintained a similar pace of growth as the previous year. While the Middle Atlantic Region registered the highest overall GOP growth in 2018, it registered the sharpest decline in 2019 at 7.9%, followed by the East North Central region with a decline of 5.2%.

STR Region Map

Same-store GOP % change, by region

-5.2%

+3.5%

-7.9%

-1.4%

+4.3%

-0.4%

-4.6%

+3.2%

+0.2%

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Reports 5Reports 5

U.S. Lodging Industry Labor Costs at a Glance

$72B Total U.S.

Las Vegas$5B

New York $5B

Orlando$2B

Los Angeles/Long Beach

$2B

Washington, DC$2B

Chicago$2B

San Francisco/San Mateo

$2B

Miami/Hialeah$1B

San Diego$1B

Boston$1B

Source: 2019 Modeled P&L data, STR

$58B Non-union

$14B Union

$8BLuxury

Upper Upscale

Upscale

Upper Midscale

Midscale

Economy

Independents

$17B

$9B

$9B

$2B

$2B

$25B

Rooms $29B

F&B$19B

A&G$10B

POM$5B

Marketing$5B

OtherDepts$3B

I&TS$1B

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Reports 6

Full-Service Department Expense Distribution Per Occupied Room Night

13%

6%

5%

13%

5%32%

Food and BeverageOther Operated Departments

General and Administrative

Sales and Marketing

Utilities

Property Operationsand Maintenance

26%Rooms

Limited-Service Department Expense Distribution Per Occupied Room Night

16%

9%

7%

19%

General and Administrative

Sales and Marketing

Utilities

Property Operationsand Maintenance

46%Rooms

2%Other Operated

Departments

1%Food and Beverage

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