Hotel study predicts declining profits
Last year was a good one for hotel profitability. But 2007 may not be coming close to matching it, says PFK’s 71st Trends in the Hotel Industry survey.
“In 2006, the average hotel manager in our survey achieved a 13.3% gain in operating profits,” the company said.
That marked the third consecutive year of bottom-line increases in excess of ten percent.
“Favorable supply/demand conditions allowed these operators to enjoy an 8.2% jump in revenues for the year. However, management continued to struggle with escalating costs,” the study said.
Some study highlights:
- An 8.3% gain in average daily room rates was the main driver of the 8.2% increase in total revenue. Concurrently, occupancy rose just 0.4%. The result was an 8.8% gain in room revenue, or RevPAR.
- Food and beverage revenues grew 7.1%, while sales in other operated departments (gift shop, golf, spa, movies, parking etc…) increased 5.9%.
- Telecommunications revenue declined (-5.5 percent) for the sixth consecutive year.
- Full-service (15.9%) and all-suite (15.2%) hotels achieved the greatest gains in profits among the five property categories covered in the survey.
- Limited-service and convention hotels saw their bottom-lines’ surge by 10.8%, while resorts achieved a profit increase of 9.6%.
- In real terms, 2006 unit level hotel profits were 20.9% behind those achieved in 2000.
In the July 2006 issue of Lodging magazine, PKF Hospitality Research forecast revenue growth of 7.6% for 2006, along with a 14.9% gain in profitability – which was close to the actual results.
“Looking towards the end of 2007, our forecast calls for a 4.7% increase in revenues and a 6.5% boost in profits,” said PFK.
Report by David Wilkening
David
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