The Asia-Pacific region had to contend with the second round of the COVID-19 coronavirus pandemic in April, and according to the latest data from HotStats, the second wave of cases resulted in an increase of containment measures. The result was a 124.1 percent plunge in year-over-year gross operating profit per available room to a historical low of -$13.92 for the region—a forecast, perhaps, of what hoteliers in Europe and the U.S. can expect if affected by second waves later this year.
Demand contraction remained the main factor behind this performance decrease. Occupancy in April was down 52.9 percentage points compared to the same time a year ago, and average rate declined 39 percent, resulting in revenue per available room falling 83.8 percent year over year. With other revenue centers virtually closed, there was nothing to compensate for the rooms slump, and RevPAR fell 83.3 percent year over year, hitting its lowest level on record.
Expenses across the board also continued to fall in April. Total labor costs declined 49.5 percent year over year led by cuts in rooms (down 53.3 percent year over year) and food and beverage (down 51.3 percent). Overhead costs followed suit, falling 51.3 percent as credit card commissions evaporated and utility expenses decreased 54 percent year over year. In all, profit conversion in APAC was recorded at -50.9 percent of total revenue, 86.2 percentage points below April 2019.
Join Hotel Management’s Elaine Simon for our latest roundtable—Post COVID-19: The New Guest Experience. The experts on the panel will share how to inspire guest confidence that hotels are safe and clean and how to win back guest business.
The silver lining is that, month after month, hoteliers in the region have become more efficient at minimizing the impact of revenue decreases on their bottom lines, according to HotStats. The flex percentage is an indicator that measures how much of each dollar lost in revenue the operation is able to retain in its profit as a result of cost-saving efforts. The higher the flex percentage, the lower the translation of revenue contractions into profit declines. In APAC, flex has been consistently increasing month after month, from 21.5 percent in January to 47.4 percent in April.
Singapore
Despite a second wave of confirmed cases, Singapore was the best-performing market in the region. After reporting a negative GOPPAR value in March, profit per room jumped to $31.37 in April. And although this number is still 68.6 percent down from 2019, it still leans toward recovery.
Hong Kong
Hong Kong also reported a new surge of coronavirus cases as a result of repatriated citizens, spurring a series of containment measures that included the closure of bars and all nonessential businesses, the prohibition of dine-in services at restaurants and increased travel restrictions. This further eroded profitability in a market that was already in recession since the start of political protests in June 2019. GOPPAR in April dropped 149.9 percent year over year to a new all-time low.
