PKF Hospitality Research has announced the latest results of their 2013 Trends in the Hotel Industry, showing a healthy 6.3% increase in rooms revenue from 2012 to 2013.
The study, which has been in existence since 1937, collects information from 6,500 hotels in the United States. The increase in year-over-year hotel revenues follows the scarcity of inventory due to historically high occupancy rate in the United States.
However, the study paired that good news with some stark challenges facing U.S. hoteliers this year, as total hotel revenues only increased 5% year-over-year. This means that revenues from food and beverage and other income increased only 2.3 percent per available room (PAR), or 0.5 percent when measured on a dollar per occupied room basis (POR).
Director of Research Information Services Richard Mandelbaum explained the findings in an email to Tnooz:
The slow growth in F&B revenue can be attributed to the change in F&B offerings at full-service hotels. More and more hotels are going towards a “select-service” model with limited restaurant hours, increased self-service, more moderate priced foods, coffee lounge lobbies, etc.
Increasing hotel operating expenses
Hotels again looked to controlling costs as a key way to boost revenues. The sampled hotels saw an increase in costs of 3.3% in 2012. Compared with a rise of 4.3% in 2011, the sample fared better this year in this area.
When measured on a Per Occupied Room basis, the costs looked much better: expense growth was only 1.5%.
Sales and marketing expenses also rose. Franchise fees, which are tired to rooms revenue, are a significant portion of branded hotels' sales/marketing costs, and the rise in rooms revenue means a larger chunk of budgets devoted to the franchise fee.
Labor expenses saw less growth, but still significant
Labor remains the top expense for hotels, accounting for 45.3 cents of every dollar spent to operate a hotel.
A rise in payroll-related costs attributed to healthcare and other taxes caused a modest 3.6% growth in expense, which is actually lower than the 4.1% increase posted in previous years. Managers are likely more attuned to wages in general, watching hourly wages carefully to ensure less overtime and higher productivity from workers.
Other expense categories
Two other expense categories moved in opposite directions, highlighting two areas of concern to hoteliers: insurance and utility costs.
Insurance was one of the fastest growing expense categories, growing 6% year-over-year. The study points to stats from the firm Swiss Re, which found 2011 to have had the second greatest dollar volume of worldwide insured losses ever. Insurers are clearly passing that along to customers in the form of increased monthly premiums across the board.
Utility costs actually dropped 3% year-over-year, pointed to the direct impact of sustainability initiatives on balancing the rising numbers elsewhere on the balance sheet.
Study lead R. Mark Woodworth catalyzed the findings:
“This finding is consistent with other research conducted by our firm...these professionals have reconciled that rising occupancy levels have led to more limited availability, thus requiring higher room rates.
However, to keep control of their meeting and travel budgets, limitations have been placed on the amount conventioneers and business people can spend on ancillary services and amenities. We already have seen hotel owners and operators react to this trend by reducing the levels of food and beverage service at their properties, along with an enhanced focus on building select-service hotels.”
The full report can be accessed here.
NB: Cash image from Shutterstock.