U.S. Hotels Generated Increased Profits in 2012

Following a welcome increase in 2011, profits at U.S. hotels were up again in 2012, according to a new report from STR Analytics.

Published this week, the report — the "2013 HOST Almanac," based on the income and expense statements of nearly 6,000 hotels — showed total industry revenue of approximately $162 billion (up 5.2 percent) and net operating income just shy of $40 billion (up 13.4 percent). Industry profits, which totaled $58 billion, were just below the industry peak, recorded in 2007.

“No matter how you revenue-manage your hotel, it’s ultimately about profit,” says Carter Wilson, director of STR Analytics, which oversees the HOST Almanac. “While it’s encouraging that the gross numbers for 2012 are near record highs, many properties are still not back to peak profit. Luxury and upper-upscale properties are leading the charge back to profitability, but there are still a lot of struggles in the middle and lower chain scale segments.”

Speaking of luxury and upper-upscale properties: According to STR Analytics, luxury hotels outperformed upper-upscale hotels in banquet revenue per available room on a two-to-one basis and had a “significantly higher” capture of revenue from cancellation fees than any other class.

And yet, 83 percent of properties with over $5,000 in F&B revenues reported a profit in the F&B department, including outlets, banquets, room rental, in-room dining and mini-bars combined.

Other key data:

• Full-service hotels reported an average occupancy of 70.2 percent and an average daily rate (ADR) of $159.52 in 2012. Limited-service hotels recorded an occupancy of 70.7 percent and an ADR of $92.15.

• Full-service hotels generated an average $244.76 in total revenue per occupied room night, up from $240.08 in 2011. Full-service, chain-affiliated hotels generated $237.26 per occupied room night while independent properties reported $336.16 per occupied room night.

• Gross operating profit (GOP) for full-service hotels was 34.1 percent, compared with 31.5 percent in 2011; it was approximately $21,344 per available room and $83.57 per room night. GOP for limited-service hotels was 49.9 percent, up from 48.8 percent in 2011; it was $47.44 per occupied room night and $12,129 per available room.

Editor's note: When this article was originally published the research was incorrectly sourced to Smith Travel Research (STR) instead of STR Analytics. We regret the error.

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