STR: Labor Costs Brought U.S. Hotel Profitability Down Further in September

Increased spending on labor created lower gross operating profit for U.S. hotels, according to STR‘s September 2021 monthly P&L data release.

Estimated labor costs came in at 96% of the comparable level from 2019, which was the highest index of the pandemic-era. All the key profitability metrics fell from August.

• GOPPAR: US$46.29
• TRevPAR: US$140.94
• EBITDA PAR: US$30.47
• LPAR (Labor Costs): US$47.50

“Higher labor margins meant less room for profits, and the GOP margin fell for the second consecutive month to 33%,” said Raquel Ortiz, STR’s assistant director of financial performance. “Like we noted last month, September P&L data was going to be interesting because the earlier reported top-line metrics were showing some return of business travel and groups. To accommodate that demand, hotels reopened F&B operations and increased their overall staffing levels in an inflationary environment with higher wages.”

Among the major markets, only San Francisco remains in negative GOPPAR territory through the first nine months of the year.

Key profitability metrics:

TRevPAR - Total revenue per available room

GOPPAR - Gross operating profit per available room

EBITDA - Earnings before interest, income tax, depreciation, and amortization

LPAR - Total labor costs per available room

STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.