Hotel Revenue, Profits Increase
Nearly three-fourths of American hotels saw higher bottom-line profits last year, reported PKF Hospitality Research, San Francisco.
The firm's survey of nearly 7,000 hotels nationwide reported 6.2 percent total revenue growth compared to the year before. Rooms revenue grew 7.1 percent, mostly because of an increase in the average daily rate. Among other hotel revenue sources, food and beverage sales increased 5.2 percent while rental and other income revenue grew 3.2 percent. Revenue from other departments, including retail, laundry and telecommunications, increased 0.9 percent.
Expenses grew 4.3 percent. "While the…growth in expenses was greater than the 3.2 percent rise in inflation for the year, it is relatively modest compared to the increases in hotel operating expenses observed during the second year of previous industry recoveries," the 2012 Trends in the Hotel Industry report said.
The top 25 U.S. account for nearly one-third of all U.S. hotel rooms and 42 percent of all hotel revenue dollars, said Jan Freitag, senior vice president of global development for Smith Travel Research, Nashville. He said the top 25 markets saw greater room-rate discounting than smaller-market hotels during the Great Recession.
"But in the last few years the rebound [from these discounted rates] was somewhat more anemic than expected given past behavior," Freitag said. "For investors and owners this probably still means that if you can time the recovery correctly--granted, that's a big 'if.' The upside for average daily rate and profit increases is still highest in the top 25 largest markets."
Jones Lang LaSalle Hotels, Chicago, reported that Miami's hotel transaction volume reached its highest level since 2005 as sales jumped 154 percent last year to $557 million. The real estate services firm expects high investor interest in the No. 14 market throughout 2012 and projects transaction volumes to increase another 17 percent over 2011 volumes.
"Miami's hotel market posted one of the highest rates of revenue per available room growth of any major gateway market in the U.S. during the first quarter of 2012," said Gregory Rumpel, managing director with Jones Lang LaSalle Hotels. "Strong leisure and business demand and constrained supply additions drove up premiums as well, as the city recorded the second-greatest nominal average daily rate growth rate of 44 percent over the past decade, second only to New York."
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