Research

Hotels & Hospitality Global Asset Management report 2021

The global COVID-19 health crisis has had a drastic and immediate impact on hotels, with operating performance reaching record lows across the world.

November 12, 2021
Contributors:
  • Andrea Grigg
  • Xander Nijnens
  • Rastko Djordjevic
  • Edouard Schwob
  • Geraldine Guichardo

Per STR’s 2020 Host report, gross operating profit per available room (GOPPAR) across each region dropped to the low teens, ranging from $10.2 to $12.2 in 2020, with the exception of Europe which observed a more depressed performance and recorded GOPPAR equal to $-2.3. 

In 2021, the successful rollout of vaccination programs across major markets, such as Europe, China and the United States has helped advance the lodging industry’s recovery with the portion of RevPAR recovered across regions ranging from 51% to 76%. That said, navigating the complexities of operating a hotel during such unprecedented times has been a challenge. RevPAR levels across each region remain suppressed, as do profitability margins.  As such, the role that hotel asset managers play has never been more critical, with hotel owners requiring strategic management of their hotel portfolios.

 As we navigate 2022 budget season with a focus on optimizing profitability and mitigating operational risks, there are four recommendations we urge hotel owners to consider:

  • With greater operational complexities and a lack of historical precedent, owners should consider a shift in focus from RevPAR to Total RevPAR to help drive profitability over the long-term
  • Formulating a property’s labor strategy is the most significant challenge heading into 2022 and represents a critical leading indicator for profitability
  • Adopt COVID-19 non-labor expense management techniques over the long-term
  • Capital expenditure strategy should balance near-term liquidity needs against long-term asset preservation goals

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