August 11, 2017

Cost controls drove hotels’ profit growth in 2016


U.S. hoteliers enjoyed a seventh consecutive year of increasing profits in 2016 despite a slowdown in the rate of revenue growth. However, by limiting the growth in operating expenses to just 1.6 percent, hotels were able to extract a 3.7 percent increase in gross operating profits for the year.

The competitive market conditions faced by U.S. hotels in 2016 have been well documented. The results of the 2017 Trends report show the impact that the modest revenue gains had on the bottom line. Facing the threat of stagnant or declining occupancy and slow ADR growth, U.S. hotel managers reacted by controlling expenses. The 3.7 percent increase in profits is the lowest observed since the Great Recession, but it was a commendable accomplishment given the upward pressures on labor and distribution costs.

Trends in the Hotel Industry is CBRE Hotels’ Americas Research’s annual survey of operating statements from thousands of hotels across the nation. The 2016 operating data collected for the 2017 survey was compiled in accordance with the 11th edition of the Uniform System of Accounts for the Lodging Industry.

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