Source: Hotel News Now
May 6, 2020
BROOMFIELD, Colorado—These are certainly not the circumstances under which STR wished to launch its new monthly profit-and-loss program, but considering the role of data during times of crisis, the launch could not have been timelier.
(STR is the parent company of Hotel News Now.)
The first month for which STR is reporting P&L data happens to be the first month to show a visible COVID-19 impact on the traditional U.S. hotel performance numbers. This produced an astounding 101.7% year-over-year decrease in gross operating profit per available room (GOPPAR), the key profitability indicator. These figures are somewhat lessened by the fact that most of the major impact from COVID-19 began in that second week of March for much of the country. Gross operating profit finished in the red nationwide, with a GOP margin of -2% of total revenues, compared to March 2019 when the average GOP margin was +42.1%.
Earnings before interest, taxes, depreciation and amortization losses were even more severe, declining year-over-year by 116.7%. The resulting EBITDA margin was -14.7% of total revenues. While GOPPAR is the best P&L key performance index for benchmarking purposes, EBITDA is even more significant right now as hoteliers struggle to reduce monthly losses. It is important to note that EBITDA is inclusive of management fees, rent, property taxes, insurance and other fixed charges, but excludes replacement reserves and owner’s expense. As such, EBITDA doesn’t tell the whole story of what hotel owners have to deal with right now.