Hoteliers posted strong gains in 2006 as profits rose 13.3 percent, on average, for the year, according to PKF Consulting’s 2007 Trends in the Hotel Industry survey. But profits in 2006 were still about 21 percent lower than in 2000, according to the survey, which polled 5,000 hotels.
Driving the growth was an 8.3 percent increase in average daily room rates, which, combined with a modest 0.4 percent gain in occupancy, resulted in an 8.8 percent jump in revenue per available room. Also, food and beverage revenues climbed 7.1 percent, while sales in other departments—gift shop, golf, spa, movies, parking, etc.—increased 5.9 percent. On the negative side, telecommunications revenues decreased 5.5 percent.
Offsetting the revenue gains, operating expenses grew 6.3 percent, with management fees and franchise fees growing 10 percent and 9.5 percent, respectively. Utility (7.3 percent), insurance (9 percent), and labor costs (4.8 percent) also increased.
Full-service and all-suite hotels enjoyed the highest profit gains, soaring 15.9 percent and 15.2 percent, respectively. Profits surged 10.8 percent in 2006 for both limited service and convention hotels, while resorts saw their bottom line rise 9.6 percent.
For 2007, PKF projects slightly lower gains, with revenues estimated to spike 4.7 percent and profits to climb 6.5 percent. These projections remain above the long-term average annual gains of 4.5 percent for revenues and 4.7 percent for profits.