There are a host of elements that impact luxury hotel performance . The segment relies on a healthy mix of leisure and corporate travel — spendy families paying top-dollar room rates and the C-suite on healthy per diems .
Above all , the luxury hotel segment relies on stability , something not indulged over the past two years . It ’ s been a protracted pandemic to be sure , and just as the world appeared to be rounding the corner on the Delta variant , along came Omicron — a rowdy interloper arriving to a party all hoped was winding down . And though the intrusion was noisy at first , Omicron could potentially be more insipid than insidious .
Despite best efforts , there is an assumption that COVID will become an endemic disease , meaning it ’ s here in perpetuity , like the flu . That means one thing : better get used to it . If it ’ s Omicron one day , it could be Upsilon next .
For the hotel industry , that means rolling with the punches — hard or soft . The dark days of 2020 are — touch wood — never coming back and as 2022 casts off , the year ahead appears brighter , if not still bumpy .
For luxury hotels — and for the majority of hotels worldwide — 2021 was a matter of location . Those city-located had a tougher go of it than ones in resort locations or so-called “ drive-to ” markets , which performed much better . Unlike select-service and limited-service hotels that have fewer services and need less staff to run , full-service and luxury properties take heavy lifting to operate , which necessitates ample staffing to deliver the myriad services and amenities .
Full-service hotels and luxury hotels were conspicuously hit hard in the early stages of the pandemic , something that carried through into 2021 , as lockdowns and other directives continued . Profit levels fell drastically as demand dried up amid a still higher cost base that had not yet been fully controlled .
The good news is that though the initial dip was harsh , luxury hotels tend to hit a growth spurt more quickly and more pronounced than other asset types . In fact , as restrictions have eased and the operating cost base of hotels has changed , the U . S . luxury segment , as of November 2021 , was running at a higher profit rate than in January 2020 , according to data from HotStats . U . S . luxury hotels in the month recorded gross operating performance per available room ( GOPPAR ) of $ 124 , which was more than 1000 % higher than at the same time in 2020 , when GOPPAR was - $ 12 , and $ 9 higher than January 2020 .
The bounce back in profit in such a small window of time goes beyond a recovery in revenue , which is still fledgling . All hotels , including luxury , have gained greater oversight over operations , meaning tighter control over expenses . According to HotStats data , payroll per available room remains more than $ 20 lower than 2019 levels . Total hotel other expenses are still down around $ 10 versus 2019 levels .
Hoteliers will do their utmost to check expenses this time around , though cost creep is inevitable as demand and occupancy rise . Still , a more vigilant eye on expense lines will be a lasting byproduct of the pandemic .
Travel is traditionally viewed as a discretionary activity , a cost that a business or household can survive without , if necessary . The pandemic has showed that several activities and business can be accomplished and transacted through technologies like Zoom and otherwise . The pandemic has also showed how much we take travel and movement for granted and when it is taken away , we relish it that much more .
The pandemic has been deadly , costly and an everyday nuisance . In the aftermath , a return to an unrestrictive lifestyle will be unassailable . And that is where the hotel industry prevails .
About the author David Eisen is Director of Hotel Intelligence , Americas , for HotStats , a global , monthly profit-and-loss data benchmarking company . He is responsible for business development activity and developing content marketing strategies to drive HotStats ’ brand awareness . Prior to joining HotStats , David served as Editor-in-Chief of the Questex Hospitality Group , which includes Hotel Management magazine . His responsibilities included overseeing content direction for the magazine and website , and leading content creation for events and conferences under the Questex umbrella . Prior to Questex , he was hotel editor at Business Travel News . David has a master ' s degree in hospitality industry studies from New York University ’ s Jonathan M . Tisch Center for Hospitality and Tourism . He frequently participates on panels and roundtable discussions on myriad global hospitality industry trends and topics .