The Raptors Won the NBA Title, But What City Won the GOPPAR Crown?

/The Raptors Won the NBA Title, But What City Won the GOPPAR Crown?

The Raptors Won the NBA Title, But What City Won the GOPPAR Crown?

|2019-08-12T16:20:12-04:00August 12th, 2019|

By David Eisen

Sporting events typically serve as huge hotel demand generators for a city. And when the games are really meaningful—such as a playoff round or championship final—they become even hotter tickets, which means a greater need for hotel rooms—for guests who are attending the games and those who are there just to share in the experience. These high-demand times typically (should) equate to higher occupancy, higher rates and (hopefully) higher monthly profitability.

The 2019 NBA Finals, which pitted the Toronto Raptors against the Golden State Warriors, was one of these events. For Toronto, it was especially satisfying since the Raptors had never made it to the NBA Finals before. For the Warriors, it’s old hat, as the franchise has been in the NBA Finals for five consecutive years, having won two championships back to back and three in the past four years.

But O Canada! Led by Kawhi “The Klaw” Leonard, Toronto claimed the title four games to two, making all of Canada—especially Drake—very, very happy.

Hoteliers, too. The Finals ran from May 30-June 13, with the games split evenly between the cities—three in Toronto and three in Oakland. The Raptors may have been victorious on the basketball court, but which city made out better on the hotel front?

Toronto

Toronto hosted Games 1, 2 and 5 and its hotel-performance data actually surprised more than Leonard’s miracle shot to beat the Philadelphia 76ers in Game 7 of the Eastern Conference Semifinals.

In sum, almost all top- and bottom-line KPIs in June underperformed versus the same period last year, when the Raptors, who lost to the Cleveland Cavaliers in the Eastern Conference Semifinals, did not host any games in June.

Occupancy actually didn’t budge at all—83% in June, the same as last year at the same time. But average room rate did—decreasing 1% YOY to $329.20. The result was a 1% drop in RevPAR to $273.11. TRevPAR also dropped, down 0.8% YOY to $396.59, hampered by a 2.8% decline in F&B revenue on a per-available-room basis.

The profit story was equally puzzling. GOPPAR was down 3.8% YOY, hindered by a 1.5% increase in total hotel labor costs on a per-available-room basis and a 1.6% uptick in total costs on a per-available-room basis.

Toronto YOY Hotel Performance

KPI June 2019 vs. June 2018
RevPAR -1.0% to $273.11
F&B RevPAR -2.8% to $102.08
TRevPAR -0.8% to $396.59
Payroll +1.5% to $120.84
GOPPAR -3.8% to $169.84

 

The down month for Toronto’s hotels is part of an ongoing adverse trend, which has seen GOPPAR drop 2.5% YTD (January to June) versus the same period last year.

Part of the challenge could be hotel inventory. Room supply is predicted to grow across Canada about 2% during 2019—its largest increase since the economic downturn in 2008—and much of that new product is opening in Toronto.

San Francisco

Perhaps more Raptors fans made their way to the San Francisco area than vice versa, as the city’s hotels recorded robust YOY gains. (San Francisco is a 20-minute drive from Oakland.)

Most KPIs pointed in the right direction for the city in June, punctuated by an 11.8% jump in GOPPAR, even in the face of rising costs on the payroll and undistributed side of the ledger. Profit margins rose 1.5% YOY.

San Francisco is known to have some of the highest daily rates in the U.S., and Finals games played on June 5, 7 and 13 likely added to that. Average room rate in June was up 6.2% YOY to $289.26 against an occupancy rate that was just shy of 90%. The combination led to a strong RevPAR result—up 5.6% over the same time last year.

Higher revenue is what saved the month for San Francisco, unlike Stephen Curry, who couldn’t. That’s because expenses continued to be a thorn in the city’s side (like Raptors guard Fred VanVleet). Total payroll was up 5.2% YOY on a per-available-room basis, while total expenses on a per-occupied-room basis were up 4.9% YOY.

San Francisco YOY Hotel Performance

KPI June 2019 vs. June 2018
RevPAR +5.6% to $259.21
F&B RevPAR +7.5% to $59.80
TRevPAR +5.2% to $138.15
Payroll +5.2% to $138.15
GOPPAR +11.8% to $137.83

Victor

Although San Francisco’s numbers outshot Toronto’s on a YOY basis in June, the good news is that both markets are strong, scoring record occupancies and demand. And although RevPAR continues to slide, which is an inevitability in this mature part of the cycle, astute hoteliers will look to drive profitability by keeping a vigilant eye on expenses and driving flow-through.

The reality is this: Both the cities of Toronto and San Francisco/Oakland perform well on and off the court. And although the Raptors won at roundball this time around, both cities are keeping it uptempo on the hotel front.

About David Eisen

David Eisen is Director of Hotel Intelligence and Customer Solutions for HotStats, a monthly profit-and-loss data benchmarking service. He is responsible for business development activity in the Americas and developing marketing strategies to drive HotStats’ brand awareness. Prior to joining HotStats, David served as Editor-in- Chief of the Questex Hospitality Group, which includes Hotel Management magazine.

Contact: David Eisen

[email protected]//

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