INTERNATIONAL
REPORT — Data from Hotstats reveals a mixed but generally positive outlook for
the global hospitality industry in 2024, as many regions are showing growth in
TRevPAR and GOPPAR. However, regional disparities and rising operational costs
are forcing hotel operators to adopt better strategies that are more
data driven.
According to
Hotstats’ data, hotel performance in the U.S. shows a clear regional divide,
with locations in the South and Midwest faring far better in profitability than
in the West, with cities like Phoenix and Los Angeles showing a sharp decline
in GOPPAR. This uneven performance highlights the importance of localized
strategies.
“Following a
few strong years from a demand and revenue growth perspective, the U.S. hotel
market has experienced a slowdown in the last 12 months, predominantly in the
lower-end segments (economy and midscale),” said HotStats CEO Michael Grove.
“This revenue slowdown, mixed with growing labor costs, has seen U.S. hotels
averaging a flow-through rate of 5%, impacting margin negatively by 1.2%
year-on-year.”
Globally,
the Middle East is a standout in terms of GOPPAR growth, while Asia Pacific had
strong growth earlier in 2024 but has faced a recent slowdown. Europe has
remained stable, but its recovery is slower than other regions.
Rising labor
costs continue to increase pressure on hotels across the industry. Labor costs
are especially climbing in key U.S. markets like Manhattan and Chicago, which
is compressing profit margins even as revenue increases. This is making
profitability a challenge for hotel owners, particularly those in the midscale
and economy segments. At the same time, top-tier luxury hotels continue to
outperform the market with significantly higher profit margins.
HotStats
said corporate and group demand continue to be positive drivers of growth,
particularly in the U.S. Revenue from conferences and banquets has increased
and has largely returned to pre-pandemic levels for corporate travel and
events, but this also comes with rising operational costs for hotels,
especially in F&B, which puts pressure on overall profitability. Hotel operators are turning to zero-based budgeting and operational
benchmarking to navigate these issues. HotStats said this data-driven approach also allows
operators to adapt quickly to changing market conditions.
“With a
market the size of the U.S., there is a wide variety of performance, even
within a single market,” Grove said. “But one thing is for sure: the focus on
efficiency and profit conversion will be vital in ensuring the profit margin is
protected.”