Labor Expenses Reduce Hotel Profitability in USA

As per STR’s September 2021 monthly P&L data release, increased labour cost resulted in reduced gross operating profit for US hotels.

Labour expenditures were estimated to be 96% of the similar level from 2019, which was the highest index of the epidemic era. Since August, all of the important profitability measures have decreased.

GOPPAR: US$46.29

TRevPAR: US$140.94

PAR EBITDA: $30.47

LPAR (Labor Costs):US$47.50  

 

“Higher labour margins meant less leeway for profit, and the GOP margin declined for the second consecutive month to 33 per cent,” Raquel Ortiz, STR’s associate director of financial performance, explained.

“As we mentioned last month, September P&L data will be noteworthy given the previously disclosed top-line measures showed some recovery of corporate travel and groups.

 “Hotels reopened F&B operations and boosted total employee levels to meet that demand in an inflationary market with greater pay.”

Only San Francisco has been in negative GOPPAR territory for the first nine months of the year.