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Privately held U.S. hotels are growing
Raleigh, N.C., January 8, 2014—Privately held U.S. hotels and motels saw their third year of solid sales and profit growth, according to recent data from Sageworks, a financial information company, and net profit margins have turned nicely positive in recent years as tourism and business travel continue to improve from the depths of the recession.
Looking at private-company financial statements filed during the 12 months ended Dec. 4, hotels and motels (NAICS 721110) generated nearly 8 percent annual growth, on average, according to Sageworks’ data. That’s in line with sales growth rates in 2012 and 2011 and above the 5-year average growth rate of about 4 percent. The growth rate is also noteworthy because, on average, privately held companies across all industries have seen slower sales growth over the last 12 months than in 2012.
“Hotels are consistently growing,” said Sageworks analyst Brad Schaefer. “In our data, we have seen some industries, like the retail sector, take a hit in sales growth but so far, hotel industry sales are still growing healthily and haven’t shown signs of stopping yet.”
Profits among private hotels and motels, on average, for the last 12 months were about 33 percent higher than they were in the year-earlier period, on top of 30-plus percent growth during each of 2012 and 2011, according to the financial statement analysis. Net profit margins, on average, approached 5 percent in the 12 months ended Dec. 4. That is on par with the industry’s average net profit margin in 2012 and a turnaround from the 5-year average margin of negative 1 percent. Ratios of costs (including direct labor) and other expenses (rent, advertising) relative to sales have been stable during the last few years, so the increased sales appear to be a major factor in the improved performance.
Meanwhile, the hotel industry is seeing some turnover in investors. Private equity firm Blackstone Group has announced or executed initial public offerings for three of its hotel chains within the last six months, and sale and purchase transaction volume is growing. Indeed, industry consultants STR Analytics expect hotel-industry transaction activity to top $18 billion in 2014.
Liquidity ratios for private hotels and motels are stable to improving, based on Sageworks’ financial statement analysis. Quick (average 2.79) and current (average 3.37) ratios for the past 12 months are above the 5-year averages.
About the Data
Sageworks possesses a proprietary database of privately held company financial statements aggregated by industry. Sageworks aggregates private-company financial statements from accounting firms, banks, and credit unions through a cooperative data model with their clients. The data is segmented and can be queried by 1,400 industry codes, 70 financial metrics, company size and geographic location.
Raleigh, N.C.,-based Sageworks is a financial information company that provides financial analysis and industry benchmarking solutions to accounting firms. Sageworks’ data and applications are used by thousands of banks and accounting firms across North America. Sageworks provides industry data on private companies to U.S. accounting firms at no cost. The company has been named to the Inc. 500 list of the fastest growing privately held companies in the U.S. and to the Deloitte Technology Fast 500.