INVESTMENT
All asset classes
AREN ’ T CREATED EQUAL
SNAP-BACK DURING THE PANDEMIC PROVES ONE TYPE OF HOTEL HAS BEEN REBOUNDING FASTER THAN OTHERS .
Contributed by DAVID EISEN , HOTSTATS
Luxury hotel profitability in the U . S . in July 2021 was higher than it was in July 2019
Unlike men , not all hotels are created equal . Each has its own location ; own employees ; own owner ; own operator ; own aesthetic ; own nuance ; own je ne sais quoi .
And though all hotels aren ’ t the same , the pandemic spared none , but its impact was felt differently across asset classes . In other shocks to the system — 9 / 11 , The Great Recession — it ’ s city-center luxury hotels with heavy reliance on corporate business that are most adversely affected at the jump .
Luxury hotels are often the domicile of well-heeled customers — the C-suite in town for an important meeting . It ’ s no surprise , then , that when disaster strikes , luxury hotels are historically the first asset class to founder . And though it may be the first asset class to stumble , the data shows that the luxury segment is oftentimes the first to bounce back after a thunderbolt .
According to HotStats data , in pre-pandemic July 2019 , luxury hotels in the U . S . recorded total revenue per available room ( TRevPAR ) of US $ 390.42 . By July 2020 , the number was down to US $ 78.41 — an 80 % decrease . That represents a huge hole in rooms and ancillary revenue . However , by July 2021 , TRevPAR popped to
US $ 325.35 in luxury hotels — just 16 % off the 2019 number .
Here ’ s the kicker : luxury hotel profitability in July 2021 was higher than it was in July 2019 — US $ 114.38 to US $ 100.68 , an increase of 13.6 %. This is even more of a feat considering the fact that the U . S . luxury asset class in July 2020 recorded the lowest GOPPAR of any asset class and of any region at ( US $ 15.66 .)
Though revenue still trailed , it was expense containment that made up the gain . Consider total payroll : in July 2021 , total labor on a peravailable-room basis was US $ 117.55 compared to US $ 169.54 in July 2019 .
72 hotelsmag . com November / December 2021