robert mandelbaum
Hotels Owners Interested in Interest
Robert Mandelbaum | October 1, 2021
By Robert Mandelbaum, Mark K. Owens The decline in the operating performance of U.S. hotels during 2020 has been well documented. According to the results of CBRE’s 2021 edition of Trends® in the Hotel Industry, total operating revenue during the year declined by 62.2 percent, which resulted in an 82.6 percent drop in gross operating profits (GOP). Similar to the decline in total operating revenues, the 30-day average annual LIBOR rate declined by 68.9 percent. 30-day LIBOR is historically the benchmark rate used by lenders for floating-rate loans, which are a preferred loan type of most institutional hospitality investors. Dec...
Controlling Telecommunication Costs
Robert Mandelbaum | July 6, 2021
Although telecommunications costs account for a small percentage of expenses, data during 2015 through 2019 revealed a significant upward trend in telecom-related expenditures. To achieve more efficient hotel operations and survive the changing landscape, hotel owners and operators are finding new ways to control telecommunications expenses. By Robert Mandelbaum & Michael Kane To gain a better understanding of telecommunication expenditures at U.S. hotels, CBRE analyzed the costs of phone and internet service within the Information and Telecommunications Systems Department (IT Department) of nearly 3,000 hotels that participated in ...
Operating Observations From 2020
Robert Mandelbaum | March 29, 2021
By Robert Mandelbaum In 2020, U.S. hotels suffered the worst year of operating performance since CBRE began tracking profitability in 1938. During the year, the average hotel in CBRE’s monthly survey of U.S. operating performance experienced a 78 percent decline in Gross Operating Profits (GOP) and achieve the lowest GOP margin (19.7%) over the past 82 years. While hotels may have earned enough revenues to cover their direct operating expenses, it is likely that the average hotel did not generate any cash from operations to cover their debt service. To track operating performance during 2020, CBRE collected monthly operating state...
The Owner’s Obligation – Cash
Robert Mandelbaum | August 17, 2020
By Robert Mandelbaum The COVID-19 virus has had an extreme negative impact on the U.S. lodging industry. According to CBRE’s June 2020 edition of Hotel Horizons®, lodging demand in the U.S. will decline by 37.0 percent in 2020. This will cause a 38.0 percent drop in the national occupancy level, along with a 22.5 percent fall in average daily room rates (ADR). The net result is a projected 51.9 percent fall off in revenue per available room (RevPAR) for the year. Using historical data from the CBRE Trends® in the Hotel Industry database of operating statements, the most likely consequence of a 51.9 percent RevPAR decline is a G...
Operating Performance at Low Occupancy Levels
Robert Mandelbaum | April 17, 2020
By Robert Mandelbaum Since January 2020, CBRE Hotels Research has been analyzing the impact of the COVID-19 virus to understand how the societal and economic impacts of COVID-19 will influence the performance of U.S. hotels. Initial guidance came in the form of updated Hotel Horizons® forecasts of occupancy, ADR, and RevPAR for the nation’s chain-scales, location categories, and 60 major markets. Concurrently, we relied on the historical relationship between declines in RevPAR to estimate the potential decreases in profits. For example, a 20 percent decline in RevPAR for a full-service hotel during 2009 resulted, on average, in a...
U.S. Hotels: Changes in RevPAR and Profits During Historical Recessions
Robert Mandelbaum | April 1, 2020
By Robert Mandelbaum The U.S. lodging industry was prepared for a slowdown in performance entering 2020. CBRE Hotels Research was projecting a 1.1 percent increase in RevPAR for the year. Even with this low level of revenue growth, there were certain factors that could have sustained - or at least cushioned the blow of minimal declines - the nine-year trend of profit growth for U.S. hotels since 2010. We are in a low inflation period, which keeps the cost of goods and services low. Recent changes to food and beverage operations and marketing practices have helped to lower fixed costs. There is no energy crisis, so utility co...
Resort Fees – A Growing Source of Revenue
Robert Mandelbaum | March 16, 2020
By Robert Mandelbaum The 11th edition of the Uniform System of Accounts for the Lodging Industry (USALI) defines resort fees as, “mandatory fees charged at either a flat amount or a percentage of the room rate.” These fees are frequently intended to cover services such as fitness facilities, spas, pools, local phone calls, Internet access, airport transportation, and golf driving ranges, among other recreational facilities. Resort fees were initially introduced to allay the complaints of resort guests who felt they were being “nickel-and-dimed” every time they used a resort amenity. Since then, the practice of charging a res...
Luxury Hotels: Elevated Occupancy and Expenses
the Authors | December 16, 2019
By Mark Woodworth and Robert Mandelbaum Despite the relatively high cost of construction and complexity of operations, developers are still attracted to owning and managing luxury hotels. As of August 2019, STR reports that just 0.7 percent of the hotels (2.3% of rooms) in the United States are chain-affiliated luxury hotels. Concurrently, the STR pipeline report shows that 1.2 percent of the properties (2.9% of rooms) either under construction or planned for development meet this criterion. The reasons for this attraction vary: Luxury hotels do achieve premium occupancy and ADR levels, that result in greater than average levels of...
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