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Log In / Register | Mar 17, 2018

Hotel Minor Operated Departments Become Even More Minor

In lodging industry parlance, other operated departments are frequently referred to as minor operated departments.  Based on recent trends in other operated department revenues and profits, these sources of income have become less consequential to both the top and bottom lines of U.S. hotels.

How the Composition of RevPAR Growth Impacts Changes in Hotel Profits

To project changes in profits we obviously need to look at the expected relative changes in revenues and expenses.  Profit growth can only be realized when the dollar value of the change in revenue exceeds the dollar value of the change in expenses.

Shifts in Revenue and Expenses Improve Hotel Food and Beverage Profits

Consumer dining trends tend to be more volatile than lodging trends.  Recognizing this, hotel managers have made some significant changes in the way they offer food and beverage service to their guests.

Hoteliers Overestimated 2016's Performance

From 2010 through 2015, U.S. hotels enjoyed above long-run average revenue and profit growth.  Over the six-year period, total operating revenue increased at a compound annual growth rate (CAGR) of 5.8 percent, while gross operating profits grew at a CAGR of 8.9 percent.

Analysis of Hotel Franchise Fees

In the current market environment of modest growth in revenue, hotel owners and operators are paying extra attention to their operating expenses. RevPAR growth in the U.S. is forecast to remain under 3.0 percent from 2018 through 2021.

The Components of Hotel Payroll

Per the Bureau of Labor Statistics, the average hourly compensation for a hospitality industry employee increased by 3.6 percent in 2016.

Hotel Management Fees, A Growing Expense

The U.S. lodging industry recovery from the depths of the great recession was characterized by strong growth in rooms revenue (RevPAR), concurrent with strict cost controls.  This combination resulted in double-digit growth rates for profits from 2010 through 2014.  Starting in 2015, market conditions changed. 

Paying the Intermediaries: An Analysis of Hotel Commissions

The increasing incidence of intermediaries selling hotel rooms and other services is a major topic of discussion among U.S. hotel owners and operators.

Select-Service Hotels: Efficient and Profitable

The definition of "select-service" within the lodging industry may vary from person to person, but there is no doubt that properties in this segment are the most popular among developers.

Hotel Rooms Departments Struggle to Control Expenses

Changes in rooms revenue per available room (RevPAR), and RevPAR penetration receive much attention from hotel managers. This is because the money hotels receive from renting guest rooms is the major revenue source across all U.S. property types.