Matters: U.S. Annual Hotel Performance Tracker 218
Matters: U.S. Annual Hotel Performance Tracker 218 Contents 3 Welcome 4 United States Washington D.C. 6 Houston 7 New York City 8 San Francisco 9 San Diego 1 About This publication may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior written consent. HotStats Limited 218. Unless otherwise attributed, all material in this publication is the copyright of HotStats Limited. Matters: U.S. Annual Hotel Performance Tracker 218 2
Welcome The hotel industry faces challenging times: guests are more vocal about their expectations of value; legislation brings increasing levels of compliance and cost; third parties continue to enter the market place and divert revenue or add cost. Never has it been more important for owners, operators, advisors and observers to possess detailed, timely, robust and accurate data about their market place in order to ensure the hotel industry continues to deliver operational efficiencies and enhanced profitability. HotStats is proud, therefore, to be publishing the results of the first Matters: U.S. Annual Hotel Performance Tracker which presents comprehensive monthly data for the full calendar year 217. In this publication, we look at: revenue composition; how the rooms and food and beverage departments costs are delivering to or impacting on departmental profit; how undistributed expenses line items are trending; and, most importantly, the profitability of America s hotels as a true indicator of the health of the sector. This data is drawn from our comprehensive hotel profit and loss benchmarking service, which allows owners, operators, advisors and observers to monitor operational hotel performance on a month-by-month basis to previously unavailable levels of detail. We compile detailed trial balance data and, through intricate mapping and analysis of this financial data, ensure the greatest levels of comparability, in compliance with the USALI 11th edition. It is timely because we do this every month; it is all we do, and we do it with a laser focus. For the first time, America s hotel industry can access and apply monthly operational profit and loss benchmarking to combat today s challenges and properly align owners and operators through crystal clear visibility all the way to the bottom line. We are excited about bringing this product to the US and thrilled at the engagement from the industry s leading hoteliers. We look forward to rolling this out to more and more contributors and to facilitating the means by which hotels can deliver exceptional performance. If you would like to join those at the forefront of hotel operational benchmarking and discover how implementing full profit and loss performance analysis helps to deliver enhanced bottom line results and real estate values, do contact us. Pablo Alonso CEO, HotStats Matters: U.S. Annual Hotel Performance Tracker 218 3
United States Monthly & 217 ket Briefing Trump economy driving profit growth Full-service hotels in the USA recorded a 2.9-percent increase in profit per room in 217, to $93.86. This was on the back of growth across all revenue departments, which fuelled a 2.-percent increase in TrevPAR for the year, to $2.. The performance of hotels in the USA has a strong correlation with the health of the economy, and despite never being far from controversy since taking office in uary 217, the Trump administration presided over a strong economic performance last year, as the USA recorded a 2.3 percent year-on-year increase in GDP, which was in spite of a slowing in Q4. This is well ahead of the 1. percent increase in 216. The growth in RevPAR at full-service hotels in the USA was driven by an increase in both room occupancy (+.7 percentage points) to 77.3-percent, as well as a 1.1-percent increase in achieved average room rate to $23.77. As a result, RevPAR at hotels in the USA increased by 2.-percent year-on-year to $7. in 217. The US hotel market has grown on the back of robust consumer spending, which increased by 3.8 per cent in Q4 217. This was the greatest margin of growth since Q1 214. Whilst the region remains dominated by commercial demand, which accounted for more than 4-percent of accommodated hotel roomnights in 217, the leisure market is a key source for hotels across the USA. However, the reduction in overseas visitors, also know as the Trump Slump will undoubtedly have impacted a number of markets. The outlook for the US hotel market in 218 is positive, with consumer spending likely to remain supported by rising household wealth, thanks to the booming stock market and higher house prices, as well as tax cuts. In ember, Republicancontrolled US congress approved the largest overhaul of the tax code in 3 years, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, which will help buoy the US hotel market. Whilst falling unemployment levels and increases in minimum wage are seen as a positive indicator of economic performance, this is likely to be one of the biggest threats to hotel profit going forward, illustrated by the 1.7 percentage point year-on-year increase in Labor costs in 217, to 34.9-percent of total revenue. For an industry which relies heavily on part-time employees who are typically paid on an hourly rather than a salaried basis, the increases in minimum wage are significant and will undoubtedly be a concern for hotel operators and investors. Although the federal minimum wage remains at $7.2, 21 states opted for a higher increase in 217, with the greatest year-on-year increase recorded in Maine, at +21-percent. A further uplift will be recorded in 218 as 18 states pledged to increase their minimum wage to as high as $ per hour. Whilst top line growth is maintained, rising costs are less of a concern. However, profit conversion at hotels in the USA has remained relatively unchanged since 2, at approximately 37-percent, suggesting the efficiency of the operation is not improving. 3 2 2 1 1 - -1 RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year Key Performance Indicators 217 216 VAR Occupancy 77.3 76.6.7pts Average Room Rate $ 23.77 21.1 1.1 RevPAR $ 7. 4.43 2. $ 2. 244.47 2. Total Labor Costs Total Rev 34.9 33.2 1.7pts Total $ 93.86 91.18 2.9 Total GOP Total Rev 37. 37.3.2pts 2. 1.7pts 2.9 4 4 3 3 2 2 1 Departmental Contribution 7 6 6 18 63 Room Department 217 216 VAR Rooms RevPAR $ 7. 4.43 2. Rooms Cost of Sales Rooms Rev 4.1 4.2 -.1 Rooms Expenses Rooms Rev.3.3. Rooms Labor Costs Rooms Rev 16.2.9.3 Rooms Dept Rooms Rev 74.4 74.6 -.2 Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 74.4 73.1 2.4 Food Cost of Sales 2.3 2.4 -.1 Beverage Cost of Sales 17. 17.6 -.1 F&B Expenses Total F&B Rev.9 1. -4.1 F&B Labor Costs Total F&B Rev 46.8 43. 3.8 F&B Dept. F&B Rev 31.3 3.8. $ 2. 244.47 2. Total Dept Total Rev 6.3 6.4 -.1 Undistributed Departments 217 216 VAR Credit Card Commission Total Rev 2.2 2.3 -.1 A&G Expenses Total Rev 2.1 2.3 -.2 A&G Labor Costs Total Rev 4.3 4.3. S&M Expenses Total Rev.1.2 -.1 S&M Labor Costs Total Rev 2.3 2.2.1 P&M Expenses Total Rev 1.7 1.8 -.1 P&M Labor Costs Total Rev 2.2 2.2. Total GOP Total Rev 37. 37.3.2 Matters: U.S. Annual Hotel Performance Tracker 218 4
Washington D.C. Monthly & 217 ket Briefing Trump Bump drives profit growth Hotels in Washington DC recorded a 7.9-percent year-on-year increase in profit per room in 217, to $19.21, which was on the back of strong growth in revenue levels and in spite of an increase in costs. Performance for 217 was boosted by a massive year-on-year increase in uary, which was as a result of the huge attendance at the inauguration of President Trump, as well as the Women s ch, which brought crowds of visitors to the nation s capital and fuelled an increase in of more than 2,-percent, albeit from an extremely low base. The year-on-year increase for the month was driven by an 89-percent uplift in RevPAR, to $186.2. The performance in uary helped to bolster hotel performance at hotels in Washington DC for the entire year, but it was also helped by the busiest convention schedule since 28, as the city hosted 22 city-wide events in 217, generating more than 486, hotel roomnights. A 4.1-percent increase in TrevPAR at hotels in DC in 217 was led by a 6.-percent increase in RevPAR, to $2.3, and was in spite of falling revenues in the Food & Beverage (-1.2-percent) and Conference & Banqueting (-2.6-percent) departments. Despite the the convention calendar for 218 remaining busy, a third consecutive year of growth in 218 seems unlikely, following year-on-year increases in 216 (+1.3-percent) and 217 (+7.9-percent), particularly without the barn-storming beginning to the year. The impact on performance levels of new hotel openings in 217, which was the most significant year-on-year increase in supply since 28, has yet to have been fully realised. But, with the addition of 12 hotel properties, comprising 1,9 bedrooms in 217, including the 226-bedroom The Darcy Washington, part of the Curio Collection by Hilton, the 17-suite Residence Inn, the 278-bedroom The Wharf InterContinental, the 17-bedroom Canopy by Hilton, the 238-bedroom Hyatt House and the 24-bedroom Pod DC microhotel, there is likely to be some fall out in the short term. Furthermore, minimum wage levels in Washington DC increased from $1. per hour to $12. per hour on 1 y 217, which is equivalent to an uplift of 19.-percent. The minimum wage is then set to incrementally increase to reach $. by 22. For a market which is heavily reliant on minimumwage employees, this will undoubtedly impact the profitability of hotels in Washington DC. 4 3 3 2 2 1 22 7 6 4 3 2 1-1 -2-3 -4 RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year Key Performance Indicators 217 216 VAR Occupancy 81.3 79.2 2.1pts Average Room Rate $ 246.63 237.8 3.7 RevPAR $ 2.2 188.26 6. $ 296.1 284.34 4.1 Total Labor Costs Total Rev 38.2 36.9 1.3pts Total $ 19.21 11.19 7.9 Total GOP Total Rev 36.9 3.6 1.3pts 4 3 2 1 Departmental Contribution 7 3 17 68 Room Department 217 216 VAR Rooms RevPAR $ 2.2 188.26 6. Rooms Cost of Sales Rooms Rev 4.2 4.3 -.1 Rooms Expenses Rooms Rev 4.8. -.2 Rooms Labor Costs Rooms Rev 17.3 17.6 -.3 Rooms Dept Rooms Rev 73.8 73.1.7 Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 84.87 8.91-1.2 Food Cost of Sales 19.1 18.7.4 Beverage Cost of Sales 16.9 16.4. F&B Expenses Total F&B Rev 4.9 9. -4.1 F&B Labor Costs Total F&B Rev.4.1.3 F&B Dept. F&B Rev 2.2 26.7-1. $ 296.1 284.34 4.1 Total Dept Total Rev 9.7 9..7 Undistributed Departments 217 216 VAR Visitor numbers to the capital hit record levels in 216, at 22 million, creating a $7.3 billion economic impact and supporting approximately 7, jobs. And further growth in visitor numbers is expected to have been recorded in 217, somewhat spurred by the number of poltical rallies in the capital. 4.1 1.3pts 7.9 Credit Card Commission Total Rev 2.2 2.3 -.1 A&G Expenses Total Rev 1.9 2.2 -.3 A&G Labor Costs Total Rev 4.7 4.7. S&M Expenses Total Rev 4.9.1 -.2 S&M Labor Costs Total Rev 2.4 2.2.2 P&M Expenses Total Rev 1.4 1. -.1 P&M Labor Costs Total Rev 2. 2.6 -.1 Total GOP Total Rev 36.9 3.6 1.3 Matters: U.S. Annual Hotel Performance Tracker 218
Houston Monthly & 217 ket Briefing Hotels in energy capital struggle to break downward cycle per room at hotels in Houston fell by 1.6-percent in 217, to $6.91, this is equivalent to a profit conversion of 41.4-percent of total revenue. The decline was further to the 1.-percent year-onyear drop in in 216, highlighting the current challenging trading conditions for hotels in the city. As one of the world s major energy hubs, demand for accommodation at hotels in Houston is dominated by the oil and gas industry with corporate and residential conference-related roomnights contributing approximately 4-percent to Rooms in 217. However, the recent crash in oil prices has hit commercial demand sources hard. Despite the current challenges in the market, RevPAR at hotels in Houston remained stable in 217, at $17.27, which was a positive result after two consecutive years of decline in 2 and 216. However, declining Non-Rooms s, including Food & Beverage (-.9-percent) and Conference & Banqueting (-.4-percent), contributed to the 1.7-percent decline in TrevPAR, to $9.. In addition, hotels in Houston have been hit by frequent incidents of flooding in recent years. The most recent being as a result of Hurricane Harvey, which sparked extreme flooding in the surrounding area in ust and tember 217. Whilst Harvey contributed to a spike in performance levels in Q4 217, as hotels were inundated with demand for temporary accommodation, which was helped by a 14-day suspension of local hotel-occupancy tax for relief-effort personnel and storm victims, the bittersweet respite in performance decline is likely to be short lived. The Houston hotel market also faces challenges from oversupply in the short-term, with additions to the market in 217 including the 223-bedroom Hotel Alessandra, the 8-bedroom Hotel ZaZa at Memorial City and the 22-bedroom Le Meridien at Downtown. A further 1,88-bedrooms are due to open in the market in 218, including the 2-bedroom The Post Oak at Uptown Houston, which could apply further pressure to already struggling top and bottom-line performance. Superbowl LI reportedly generated an estimated $428 million in new spending to Greater Houston, which was driven by local travel spending by, visitors. For hotels in the city, the benefit of the event was illustrated in the 27.-percent year-on-year increase in profit per room for the month of ruary 217, which was fuelled by a 2.-percent increase in RevPAR, to $.62, which was a peak in this KPI in 217. Despite the performance uplift as a result of Superbowl LI, overall revenue and profit levels at hotels in Houston are some of the weakest in the US. This is illustrated by the recorded in 217, at just $6.91, which is 42.4-percent below the national average, at $93.86. That said, Labor costs at hotels in Houston remain well below the national average, at 3.2-percent of total revenue, which is due to the minimum wage for Texas remaining in line with the Federal Minimum Wage rate at $7.2 per hour. 2 2 1 3 2 1-1 -2-3 -4 - RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year -1.7 1.6pts Key Performance Indicators 217 216 VAR Occupancy 7. 7.7 -.7 Average Room Rate $ 3.19 1.68 1. RevPAR $ 17.27 17.27. $ 9. 161.84-1.7 Total Labor Costs Total Rev 3.2 28.6 1.6pts Total $ 6.91 66.97-1.6 Total GOP Total Rev 41.4 41.4.pts -1.6 6 4 3 2 1 Departmental Contribution 6 6 16 67 Room Department 217 216 VAR Rooms RevPAR $ 17.27 17.27. Rooms Cost of Sales Rooms Rev 4.2 4..2 Rooms Expenses Rooms Rev.7.6.1 Rooms Labor Costs Rooms Rev 12.1 12.2 -.1 Rooms Dept Rooms Rev 78. 78.3 -.3 Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 42.92 4.9 -.9 Food Cost of Sales 19.1 2. -.9 Beverage Cost of Sales 16. 16.3 -.3 F&B Expenses Total F&B Rev.1 8.2-3.1 F&B Labor Costs Total F&B Rev 39.9 36.4 3. F&B Dept. F&B Rev 41. 4.6.4 $ 9. 161.84-1.7 Total Dept Total Rev 67.2 66.6.6 Undistributed Departments 217 216 VAR Credit Card Commission Total Rev 2.4 2. -.1 A&G Expenses Total Rev 2.6 2.6. A&G Labor Costs Total Rev 4.4 4.4. S&M Expenses Total Rev.2.1.1 S&M Labor Costs Total Rev 3.4 2.9. P&M Expenses Total Rev 2.3 2.3. P&M Labor Costs Total Rev 2.6 2..1 Total GOP Total Rev 41.4 41.4. Matters: U.S. Annual Hotel Performance Tracker 218 6
New York City Monthly & 217 ket Briefing Unionised labor shrinks profit margins Strong demand enabled hotels in New York to drive one of the highest TrevPAR levels of all hotel markets in the US in 217, at $391.8. However, hotels in the Big Apple have one of the lowest profit conversions, at just 3.7-percent of total revenue, which is primarily due to very high Labor costs. Room occupancy and achieved average room rate are also amongst the highest in the US, and delivered a RevPAR of $28. in 217. This is is a 2.8-percent year-on-year increase on the same period in 216 and more than 8-percent above the national average, at $7.. New York is the major gateway city to the US for visitors from Europe and the Middle East and attracted 62.8 million arrivals in 217, an increase of 2.3 million on 216. Strong demand levels are also supported by New York s position as a global hub of international business and commerce. Despite this, hotels in New York have struggled to increase average room rate in recent years, which is not only due to the unrelenting pace of development, but also the challenges from the sharing economy, including Airbnb. As a result, average room rate at hotels in New York fell by 1.2-percent in 217, which is further to the 3.-percent drop in this measure in 216. In spite of the wealth of dining options in the city, TrevPAR growth at hotels in New York is supported by the Food & Beverage department, which comprised 17-percent of total revenue in 217, further to a 6.3-percent year-on-year increase to $94.47 on a per available room basis. There are currently over 27 hotels with nearly 38, rooms in the supply pipeline across New York City, with approximately of rooms planned for Manhattan. The outlook for New York remains much the same as in recent years, with significant supply increases likely to dampen hotels ability to drive top-line performance and therefore the focus must turn to measuring and managing costs. The biggest challenge for hoteliers in New York remains in, which was recorded at 46.-percent of total revenue in 217, up from 44.-percent in 216 and 42.7-percent in 2. The uplift in Labor costs has clearly been as a result of the phased year-on-year increases in minimum wage, as the government targets a minimum of $ per hour in the city. This has been to the detriment of profit conversion at hotels in New York, which has been subject to consistent downward movement in recent years and, at 3.7-percent of total revenue in 217, is 7.-percentage points below the national average. The profit challenges are evident in the seasonality graph, as during months of lower top-line performance (ie uary and ruary), profit per room can easily fall into single figures. Nevertheless, and in spite of the challenges to profit levels and New York being the most expensive city in which to develop in the world, the appetite for development remains robust. 4 3 2 1 3 2 2 1 - -4 - RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year 2.8 2.pts Key Performance Indicators 217 216 VAR Occupancy 87.2 8. 2.2pts Average Room Rate $ 327.3 331.34-1.2 RevPAR $ 28. 281.48 1.4 $ 391.8 38.83 2.8 Total Labor Costs Total Rev 46. 44. 2.pts Total $ 12.26 116.97 2.8 Total GOP Total Rev 3.7 3.7.pts 2.8 4 4 3 3 2 2 1 Departmental Contribution 13 7 3 4 73 Room Department 217 216 VAR Rooms RevPAR $ 28. 281.48 1.4 Rooms Cost of Sales Rooms Rev 3.9 4. -.1 Rooms Expenses Rooms Rev 4.7 4.8 -.1 Rooms Labor Costs Rooms Rev 2.7 24. 1.2 Rooms Dept Rooms Rev 6.7 66.7-1. Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 94.47 88.9 6.3 Food Cost of Sales 17.8 18.1 -.3 Beverage Cost of Sales.4 16.1 -.7 F&B Expenses Total F&B Rev 6. 13. -6. F&B Labor Costs Total F&B Rev 7. 66.6 3.9 F&B Dept. F&B Rev 1.2 6.9 3.3 $ 391.8 38.83 2.8 Total Dept Total Rev 2.6 3. -.4 Undistributed Departments 217 216 VAR Credit Card Commission Total Rev 2.3 2.3. A&G Expenses Total Rev 1.2 1. -.3 A&G Labor Costs Total Rev.4.4. S&M Expenses Total Rev 4.4 4.4. S&M Labor Costs Total Rev 2.1 2..1 P&M Expenses Total Rev 1.6 1.6. P&M Labor Costs Total Rev 2.6 2.6. Total GOP Total Rev 3.7 3.7. Matters: U.S. Annual Hotel Performance Tracker 218 7
San Francisco Monthly & 217 ket Briefing Rising labor costs hit profit levels 4 3 4 4 Departmental Contribution per room at hotels in San Francisco fell by 6.8-percent year-on-year, to $112.8, as a result of falling revenue levels as well as a sharp increase in costs. Whilst the number of tourists to the city increased to 2. million in 217, the 1.4-percent year-on-year growth was thought to be underwhelming, with the San Francisco Travel Association (SFTA) highlighting the homelessness crisis and the general declining image of the USA as a destination for visitors, as two issues impacting growth. The SFTA also identified ongoing work at the Moscone Center as a potential contributing factor to a drop in visitor numbers. These factors, amongst others, contributed to a decline in revenue levels in 217, which were led by a 3.4-percent drop in RevPAR. This was as a result of declining Room Occupancy (-1.8-percentage points) to 86.2-percent and achieved average room rate (-1.4-percent), to $267.91. Top line performance at hotels in San Francisco also came under pressure in 217 from the addition of approximately 7 bedrooms, after relatively few openings in 2 and 216. The additions to the market were around SoMa and Mid-ket and included the 9-bedroom Hotel Via, the 131-bedroom Proper Hotel, the 196-bedroom Virgin Hotel and the 23-bedroom Yotel. Despite growth in Non-Rooms revenues, which included a 4.9-percent increase in Food & Beverage per available room, Total levels at hotels in San Francisco fell by 1.6-percent year-onyear, to $312.44. The outlook for San Francisco hotels in the short term is challenging. The city s development pipeline is full of proposed hotel projects. In the past 18 months applications have been filed for 11 hotels totalling 1,88 rooms, which is in addition to the 12 prospective hotels already within the city s approval process. Due to the ongoing debate over affordable housing requirements, which have stalled residential development, as well as the cap on the amount of commercial space that can be approved in a given year, hotel construction in the city remains an attractive option for developers and more hotels are likely to come on line. Whilst the $ million investment in the Moscone Center will be a huge asset to the city and its hoteliers, offering 1. million square feet of conferencing space and allowing the city to compete on a national and international scale for major congresses, conferences and events, it is unlikely to be fully operational until 219. In addition to the drop in top-line performance, the bottom line at hotels in San Francisco fell by 6.8-percent year-on-year in 217, to $112.8. This was primarily due to the challenges of rising Labor costs, which, in 217 were recorded at 41.2-percent of total revenue. This is further to a 4.6-percentage point year-onyear increase, as the city incrementally raises its minimum wage levels to $ per hour by 1 y 218. 3 2 2 1 2 2 1 - -1 - -2-2 -3 RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year -1.6 4.6pts Key Performance Indicators 217 216 VAR Occupancy 86.2 88. -1.8pts Average Room Rate $ 267.91 271.63-1.4 RevPAR $ 23.89 239.14-3.4 $ 312.44 317.6-1.6 Total Labor Costs Total Rev 41.2 36.6 4.6pts Total $ 112.8 12.83-6.8 Total GOP Total Rev 36. 38. -2.pts -6.8 3 3 2 2 1 14 3 4 74 Room Department 217 216 VAR Rooms RevPAR $ 23.89 239.14-3.4 Rooms Cost of Sales Rooms Rev 4.7. -.3 Rooms Expenses Rooms Rev 4.8 4..3 Rooms Labor Costs Rooms Rev 21.7 2.7 1. Rooms Dept Rooms Rev 68.8 69.8-1. Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 71. 68.18 4.9 Food Cost of Sales 17.9 18.4 -. Beverage Cost of Sales 17.7 17.3.4 F&B Expenses Total F&B Rev. 11.3-6.3 F&B Labor Costs Total F&B Rev 64.1 7.7 6.4 F&B Dept. F&B Rev 16.7 16.6.1 $ 312.44 317.6-1.6 Total Dept Total Rev 7. 9.1-1.6 Undistributed Departments 217 216 VAR Credit Card Commission Total Rev 2.3 2.4 -.1 A&G Expenses Total Rev 1.7 1.9 -.2 A&G Labor Costs Total Rev 4. 4.2.3 S&M Expenses Total Rev. 4.9.1 S&M Labor Costs Total Rev 1. 1.6 -.1 P&M Expenses Total Rev 1.3 1.3. P&M Labor Costs Total Rev 2.8 2.7.1 Total GOP Total Rev 36. 38. -2. Matters: U.S. Annual Hotel Performance Tracker 218 8
San Diego Monthly & 217 ket Briefing growth driven by broad demand base 3 3 6 Departmental Contribution Full-service hotels in San Diego recorded a 7.-percent increase in profit per room in 217 on the back of a 7.-percent increase in TrevPAR growth, to $29.42. Demand for hotel accommodation in San Diego is led by the commercial segment, which comprised more than percent of accommodated roomnights in the city in 217. The key sectors include the federal government and the military, which in 217, generated $2 billion in direct defense-related spending in San Diego, comprising approximately 22-percent of the county s GDP. In addition, San Diego is an extremely popular tourist destination, attracting approximately 3 million visitors in 217, generating approximately $17.9 billion of expenditure. The elevated profile of the San Diego hotel market has resulted in consistent annual increases in top-line performance being achieved over the last ten years, with a 1.2-percentage point increase in room occupancy in 217, as well as a 2.9-percent increase in achieved average room rate, to $221.21. The Convention Center alone typically generates up to 9, roomnights for the Downtown area across 7 events, with one of the annual highlights being Comic Con, which reportedly injects approximately $8 million of direct spending into the city each year in y. Despite additions to stock, which have included the 317-bedroom Pendry Hotel Downtown, the 116-bedroom Fairfield Inn & Suites San Diego North, the 13-bedroom Springhill Suites Carlsbad, the 24-bedroom Homewood Suites San Diego Hotel Circle, the 148-bedroom Residence Inn Chula Vista and the 1-bedroom Courtyard by riott El Cajon, the San Diego hotel market is well positioned to continue to grow. Not only does the city have a broad and stable base of demand, key events also drive the requirement for accommodation, exemplified by the packed calendar in 217, which included the Farmers Insurance Golf Tournament, World Baseball Classic, Red Bull Air Races, Gold Cup Soccer Tournament, KAABOO Del, Extreme Sailing and the Breeder s Cup. Furthermore, demand could see continued growth as the wellestablished technology sector expands in the county. On the downside, the departure of San Diego Chargers from the city resulted in signficantly reduced volume levels year-on-year around historic game times. However, this seems to have been amply replaced by other sources. As a result of the ongoing decline in unemployment levels to below both the state and national averages, there is pressure on Labor costs at hotels in San Diego, which increased by 3.-percent year-on-year, to 28.4-percent of total revenue. And whilst minimum wage growth will contribute to the ongoing increase, the rate is to be indexed in line with the Consumer Price Index, rather than targeting the $ per hour level, which is the policy for the state of California. 2 2 1 4 3 2 1-1 -2-3 -4 RevPAR Other RevPAR GOP gin 217 vs 216 TrevPAR & Year-on-Year 7. 3.pts Key Performance Indicators 217 216 VAR Occupancy 84.4 83.2 1.2pts Average Room Rate $ 221.21 214.81 3. RevPAR $ 186.6 178.8 4.4 $ 29.42 274.87 7. Total Labor Costs Total Rev 28.4 2.4 3.pts Total $ 136.8 127.1 7. Total GOP Total Rev 46.2 46.2.pts 7. 4 3 2 1 7 6 19 63 Room Department 217 216 VAR Rooms RevPAR $ 186.6 178.8 4.4 Rooms Cost of Sales Rooms Rev..3.2 Rooms Expenses Rooms Rev 4.3 4.3. Rooms Labor Costs Rooms Rev 12.1 12.1. Rooms Dept Rooms Rev 78.2 78.3 -.1 Food & Beverage Department 217 216 VAR Total F&B RevPAR $ 87. 76.34 14.7 Food Cost of Sales 17.6 18. -.4 Beverage Cost of Sales 16.1 16.2 -.1 F&B Expenses Total F&B Rev 4.9 11.7-6.8 F&B Labor Costs Total F&B Rev 42.6 36.1 6. F&B Dept. F&B Rev 38.7 37.9.8 $ 29.42 274.87 7. Total Dept Total Rev 66.2 66.9 -.7 Undistributed Departments 217 216 VAR Credit Card Commission Total Rev 2.2 2.3 -.1 A&G Expenses Total Rev 1.8 2. -.2 A&G Labor Costs Total Rev 3.3 3. -.2 S&M Expenses Total Rev 4.7. -.8 S&M Labor Costs Total Rev 2. 2.. P&M Expenses Total Rev 1. 1.. P&M Labor Costs Total Rev 1. 1.. Total GOP Total Rev 46.2 46.2. Matters: U.S. Annual Hotel Performance Tracker 218 9
About The hotels profiled in this Performance Tracker are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains from which we collect monthly data. Glossary of KPIs Services Occupancy () is that proportion of the bedrooms available during the period which are occupied during the period. HotStats provides monthly & Loss Competitive Benchmarking and ket Reporting for hoteliers and industry partners. Average Room Rate (ARR) is the total bedroom revenue for the period divided by the total bedrooms occupied during the period. RevPAR is the total bedroom revenue for the period divided by the total available rooms during the period. is the combined total of all revenues divided by the total available rooms during the period. Labor Costs Total Rev is the payroll for all hotels in the sample as a percentage of total revenue. is the Total Gross Operating for the period divided by the total available rooms during the period. For a more detailed explanation of these and other KPIs as well as the latest practices for recording financial information in the hotel sector please refer to the Uniform System of Accounts for the Lodging Industry, 11th Edition. Competitive Benchmarking Our unique operational profit and loss benchmarking service enables monthly comparison of a hotel s performance against a competitive set, both geographic and facility (ie hotels of a similar scale, standard, range and mix of facilities). It is distinguished by the fact that it provides more than performance metrics covering revenue, cost and profit statistics providing the deepest insight available into hotel operations. ket Reporting On-demand monthly full profit & loss market intelligence reports for geographic and facilityset markets. Understand true market performance with timely, up-to-date financial information. Available as one-off or subscription based. Visit hotstats.com/market-reports for a description of available market reports. For more information contact enquiries@hotstats.com +1-877-2-22 Follow us on linkedin.com/company/hotstats twitter.com/hotstats Matters: U.S. Annual Hotel Performance Tracker 218 1
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