Home Guangzhou Hotel Group Buy Business Canton Fair Cars Renting Service Exhibition List Help About Us
 Home > Canton_Fair > Hotel_News
Categories Minimize this
Search Hotels Minimize this
Check-in date:
Check-out date:
Contact Us Minimize this
+86-20-85636365 (China)
+1-323-282-7888 (US)
+86-20-62614116
sales@withyoutrip.net
<img align='absmiddle' src='https://www.hotel-guangzhou.com/hotel_img/skype.jpg' width='100' height='47'>Chat with me
US hotel profits on the rise
  Date:6/10/2014  Tags: US hotel news 

The industry has fully recovered on a revenue basis, and it is only a matter of time before its profits fully recover.

 

BROOMFIELD, ColoradoHotel industry revenue levels topped an estimated $163 billion in 2013, with house profits nearing $60 billion and net operating income just more than $41 billion, according to STR Analytics HOST Almanac. STR Analytics is a sister company to Hotel News Now. 

These absolute levels represent new peaks; though fall shy of the record levels on a per-available-room and percent-of-revenue basis set in 2007.

 

The following chart details hotel industry profitability in the United States from 2001 to 2013. A few caveats: This data extrapolates only on scale with the total amount of properties reporting room revenue to STR, parent company of HNN, and uses all properties that reported profitability data, not just same-store properties. Also, house profit is defined as profit before deductions for fixed charges and management fees, while net income includes those deductions.

 

Same-store hotels realized NOI increases of 10% in 2013. The average property most likely to experience a profit decline in 2013 was an upper-mid scale hotel (39% of all upper-mid scale hotels registered declines), while luxury hotels were most likely to increase profit (89% of all luxury hotels did). 

 

Looking at the U.S. as a whole, most markets experienced increases in house profit in 2013. Those areas shaded in dark green enjoyed the strongest profit growth, while the darkest reds indicate greatest profit decline. With the exception of the Riverside/San Bernardino, California, market, house profit in the entire Western U.S. rose in 2013. Some areas of the Midwest and Texas struggled, along with a few pockets in the Southeast, the Eastern Seaboard and the Mid-Atlantic.

 

Room revenues relationship to market value

 

With most rooms available sold and highest rooms revenue breaking all-time records in 2013, the cash-flow performance for hotel assets continued to increase in 2013. Consequently, the market values remained strong and the number of distressed asset sales declined. While 13% of the asset trades that occurred in 2012 were distressed assets, 7% of the asset trades in 2013 were in a distressed situation.

 

The relationship of room revenue to market value is often a better gauge for pricing. In many cases, purchasers of hotels underwrite to a similar NOI percentage based on a typical management scenario regardless of how the hotel is performing. The adjustments vary significantly depending on the investor and/or management companys experience and expertise. However, room revenue projections are often similar because it is more dependent on the competitive environment. Thus, investors valuation estimate in relation to room revenue is more consistent than capitalization rates, which are based on the bottom line. Moreover, investors focus on the revenue component of an asset because they have more comfort in their ability to control the expense levels.

 

There is a clear relationship between the asset classes and their respective room-revenue multipliers, with luxury properties around 5.6, economy at 3.7 and mid scale hotels around 2.3. The multiplier is calculated by price over room revenue.

 

The price-per-room trends flow in a similar trickledown fashion to the room-revenue multipliers but are far more pronounced. They range from $35,000 per key for mid scale properties to an average of $441,000 per room for luxury assetsalmost 13 times higher.

 

Supply, demand and average daily rate saw new highs in 2013, and profitability data suggest operators were able to control costs, helping to push absolute net income levels to new highs. Luxury and upper-upscale hotels continued to lead the surge in profit, aided by steeper increases in ADR.

 

Overall, the industry has fully recovered on a revenue basis, and it is only a matter of time before its fully recovered on a profit basis as well. On a same-store, per-available-room basis, total revenue growth of 5.4% outpaced the increases of departmental and operating expenses, leading to a gross-operating-profit increase of 9%. Departmental and undistributed operating expenses saw modest increases of 3.8% and 2.8%, respectively. While the industry achieved record profits in total dollars in 2013, income as a percent of revenue was still a bit shy of what the industry achieved in 2007. By the end of 2014, its likely this record will be broken as well.

Add to Favorites Copy this address Print this article
     
Booking Steps <img src='https://www.hotel-guangzhou.com/hotel_img/search_01.gif'  align='absmiddle'>Choose your favorite hotels. <img src='https://www.hotel-guangzhou.com/hotel_img/search_02.gif'  align='absmiddle'>Submit online or send email to sales@withyoutrip.net. <img src='https://www.hotel-guangzhou.com/hotel_img/search_03.gif'  align='absmiddle'>Wait for the confirmation of Withyou Trip within two hours.<img src='https://www.hotel-guangzhou.com/hotel_img/search_04.gif'  align='absmiddle'>Offer guarantee or prepay by multiple payment options. <img src='https://www.hotel-guangzhou.com/hotel_img/search_05.gif'  align='absmiddle'>Get the Final Confirmation or voucher from Withyou Trip. Everything has been finished.
Hotels in Guangzhou Guangzhou hotel Guangdong Nanyang Royal Hotel China Hotels
Landsman Hotel Ramada Plaza Guangzhou Grand Continental Service Apar IT World Hotel
Teem Ease Hotel Guangzhou Yixing Hotel Phoenix City Hotel South America Grand Hotel
Guangzhou Baiyun International Jianghe Hotel Grand Royal Hotel Garden Hotel Guangzhou
Guangzhou New East Hotel Guangzhou Hotels Hotels In Guangzhou Seo
Copyright©2008-2014  Withyou Trip  All rights reserved