March performance shows big global rebound, China aside

Global first-quarter hotel performance ended on a high with profit rising in many regions, an indication of stronger revenues and better conversion rates, revealed the latest report by HotStats.

The U.S. reported a surge in operating revenues. March 2022 GOPPAR increased by US$70 over January 2022 and at US$90, it was closing in on March 2019’s level, marking the highest profit month in the country since February 2020.

ADR growth led the recovery in the U.S., with March ADR on a nominal basis at its highest level since October 2018. Operators converted most of the revenue into profit, evidenced by a flow-through-rate of over 50% in March. Despite rising labor costs, it isn’t moving at a rate higher than the rise in total revenue.

While corporate business remains muted, association and convention volume rose in March, its best result since March 2020.

Europe results

At €35.97 (US$38.09), European GOPPAR reached the highest since peaking in October 2021 although it was €12 (US$12.7) lower than March 2019. Since GOPPAR dipped into the negative territory in January, it is now up 229% YTD compared to the same period in 2021.

Simultaneously, there was an increase in both RevPAR and TRevPAR, with both rising triple-digit percentages in March compared to the same month in 2021. While occupancies surged, the rising ADR helped drive business. Across Europe, ADR peaked in September 2019, but in March 2022 ADR was €25 (US$26.47) higher than March 2019.

On the other hand, while expenses dipped a bit, overall costs remained stubborn. Total labor on a per-available-room basis continued to be below 2019 figures but significantly up YTD since 2021 — 143%. Other departmental costs, including utilities, have not gone down and at €7.5 (US$7.94), was 107% higher in Q1 compared to the same period last year and significantly higher than at any time pre-COVID.

The Al Wasl Plaza dome at the Dubai EXPO 2020 was the central hub for the expo.

Record GOPPAR in Middle East

In the Middle East region, the delayed Expo 2020, which wrapped up in March, underpinned operating performance. March GOPPAR of US$114.33 was the highest-performing month in the region since before 2018 and 41% higher than in 2021.

TRevPAR was at its highest since April 2018, boosted by a rise in food and beverage revenue, which touched US$71.87 on a PAR basis. Food and beverage revenue is expected to continue its uptick, especially since cities like Dubai have eased their F&B rules during the month of Ramadan (April 1 to May 1), allowing venues to serve food and drinks during specified working hours without requiring permits. Previously, F&B venues had to stay closed until the fast was broken at sunset.

China an exception

Unlike the other regions, China did not report a similar success as the reemergence of COVID and resultant lockdowns dragged the sector’s performance. At -US$3.83, March GOPPAR dropped into the negative territory for the first time since February 2020. As a result, payroll costs also dipped forcing a cut back in workforce. Total payroll on a PAR basis dropped to US$28, the lowest since July 2020.