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THE OMICRON VARIANT has not good for the hospitality industry, but it hasn't been as bad as expected, which is a good sign for the future, according to HotStats. GOPPAR for November was up from the same time last year, but still down from 2019. GOPPAR for November was $55.68, down 29.4 percent from November 2019. It's also down from $68.97 In October, but according to HotStats that is not unusual for this time of year. "A typical spike in profit in October, normally gives way to a drop off in November," HotStats said. "ADR in the month was $7 higher than at the same time in 2019 after being well down in 2020. This helped drive both RevPAR and TRevPAR, which were both up triple digits over 2020, though still down considerably versus 2019." The appearance and rapid spread of Omicron, which originated in South Africa and by December was the dominant strain in the U.S., was a "noisy" intrusion, HotStats said, coming as it did while the country was still dealing with a spike from the Delta variant. However, it could turn out to "be more insipid than insidious."

GOPPAR OF U.S. hotels hit $65.98 in February, its highest point since October last year and more than $40 more than in January, but down from $90 in February 2019, according to HotStats. However, a rise in expenses could derail a profit rebound, the data analyzing firm said. The payroll expense of U.S. hotels was up to $66.60 per available room in February, highest since the inception of the pandemic, according to HotStats. Though payroll is up 192 percent from its lowest point during the pandemic, it is still down $30 when compared to pre-pandemic numbers. Factors such as inflation, supply chain problems and war in Ukraine are driving costs up. Expense on utilities on a PAR basis are already back to pre-pandemic levels, HotStats said.

MONITORING GOPPAR PERFORMANCE allows hoteliers to make smart decisions about running their business as they consider all revenue streams and cost variables, according to HotStats. The focus should be on maximizing profit rather than just increasing revenue. GOPPAR is calculated by taking total revenue, subtracting total departmental and undistributed expenses, then dividing by the total number of available rooms, according to a blog post by HotStats. GOPPAR index measurement gives guidance about why a hotel is either outperforming or underperforming its direct competitors, allowing a hotel owner to make critical changes to improve business, it said. In February, GOPPAR for U.S. hotels was down 33 percent compared to February 2019, whereas RevPAR was down 26 percent for the month. It provided evidence that costs were eating farther into the P&L in February.

ZERO-BASED BUDGETING is essential for hotels amid near- and long-term volatility, according to a blog from HotStats. The blog also suggested that hoteliers need to turn to other futureproofing or future-cushioning methods. In a recent blog post, Michael Grove, COO, HotStats said that zero-based budgeting, a method of budgeting in which all expenses must be justified for each new period starting from a zero base, is very necessary given the fluidity of the global economy and, ultimately, its impact on hotel operations. At the recent 2022 M3 Partners meeting, Grove first illustrated the pandemic's effect on worldwide profits and how it's changed the landscape. "It's worth reminding ourselves of the importance and magnitude of the U.S. hotel industry's share on the global scale, which has only grown during the pandemic," Grove said in the article. According to the blog post, almost half of global profits are produced in the U.S. and that share only rose as the pandemic slackened. "A massive 47 percent of hotel profits are achieved in the U.S., up 6.6 percentage points since 2019, the result of myriad variables, including a large domestic market and staycation trend," Grove said in the post. "Meanwhile, severe lockdowns and restrictions in Europe and Asia-Pacific sent their percentages down as the Middle East received a boost in the fourth quarter 2021 from Expo 2020 in Dubai."

THE PERFORMANCE OF U.S. hotels ended strong in the first quarter with March profit surging across most global regions, according to HotStats. The research firm said stronger revenues, better conversion rates and less worry by travelers about a COVID upsurge drove the first quarter surge in performance. During the quarter U.S. hotels saw an increase in its operating fortunes, according to a blog post on the HotStats website. GOPPAR in March 2022 was up $70 over January 2022 and at $90 was closing in on March 2019's level. It was the highest profit month in the U.S. since February 2020, the last normalized month of performance before COVID-19 reframed the world. ADR growth in the U.S. led the way in recovery with March ADR on a nominal basis was at its highest level since October 2018.

THE MAJOR CHALLENGES faced by U.S. hotels are labor, the return of corporate, group and conference travel, the impact of inflation on cost lines and the energy crisis, said Michael Grove, COO of HotStats, in a recent presentation. In the same session at the International Hospitality Investment Forum, panelists debated the best metric by which to measure industry performance. While speaking during a panel session at IHIF titled "Decoding the Data", Grove said that the most pressing issue is fixed costs are being replaced by oncoming growth in the variable areas which changes the dynamic of the cost base. "One of the key items around the average rate growth is what's going to happen when the full business mix returns," Grove said. "We still have a lot more of the lower-rated business to come back-the tours and groups and the other segments. We need to look at the impact on the cost lines themselves, the expense items around the P&L and what impact inflation is having on those, what impact the labor challenge is having.