Five and four star hotels in Dubai continued to experience weakening average room rates (ARR) in October, falling 8.1% to US$312.08 whilst occupancy levels remained strong, albeit marginally lower than the same period last year at 82.9%. The decrease in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 12.0%, driving total revenue per available Room (TRevPAR) 8.8% lower, to US$423.54. Higher operating expenses compounded lower overall revenues, reducing gross operating profit per available room (GOPPAR) by 17.0% to US$194.64.

After reporting strong results in September, four and five star hotels in Manama witnessed a decline in all performance indicators in October, driven by weak demand. Occupancy levels fell 6.2 percentage points to 50.8%, impacting ARR and RevPAR which fell 14.6% and 24.0% respectively. Although beverage revenues increased 5.6% during the month, the increase was unable to offset declines in food and banqueting revenues. Softer TRevPAR levels and increased operational expenses impacted profit margins with GOPPAR falling 41.2% to US$47.31.

Rise in profits for Amman and Riyadh hotels

Hotels in Amman witnessed a 9.1 percentage point growth in occupancy to 67.9% in October, offsetting a 5.6% decline in ARR. The renewed demand drove an increase in all performance indicators including RevPAR which rose 8.9% to US$103.24. Conference and banqueting revenues grew 34.7% during the month, contributing to a 9.7% increase in TRevPAR to US$168.49. Stronger top line revenues coupled with lower operational expenses resulted in GOPPAR rising 38.8%to US$67.70.

Riyadh hotels witnessed strong demand levels in October with four and five star hotels recording a 12.0 percentage point increase in occupancy to 66.3%. However, hoteliers were unable to capitalise on the strong demand as ARR fell by a marginal 1.1% to US$226.07. The increased occupancy levels had a positive effect on the remaining performance indicators with RevPAR and TRevPAR rising 20.8% and 18.5% respectively. Lower operational expenses allowed GOPPAR to increase 36.0% to US$117.94.

Soft demand in Doha impacts hotel performance

Although Doha is witnessing increasing economic activity, the city’s hotel market saw demand levels fall in October with occupancy dropping 1.4 percentage points to 74.9%. The fall in demand impacted all remaining performance indicators with ARR and RevPAR dropping 12.7% and 14.3%, respectively. Higher F&B demand offset the softer room revenue; however it was not sufficient enough to prevent GOPPAR reducing 8.6% to US$160.78.

Egypt’s race to recovery – Sharm El Sheikh sees highest occupancy and Cairo posts record profits since the Revolution.

Cairo’s hotels posted the highest profits while Sharm el Sheikh registered the highest occupancy since the beginning of the revolution in early 2011 according to the latest HotStats survey of full service hotels in seven MENA cities by TRI Hospitality Consulting.

Hotels in Cairo showed signs of full recovery in November registering a 74.3% increase Gross Operating Profit per Available Room (GOPPAR) to US$71.75 and saw the strongest profit earnings since the revolution started in early 2011. Revenue per Available Room (RevPAR) grew 32.3% to US$64.27 driven by a 14.3 percentage point increase in occupancy to 55.0% which masked the 2.0% decline in Average Room Rate (ARR) to US$116.81.

Hotels in Sharm el Sheikh entered the high season showing signs of improvement across performance indicators. Occupancy in the coastal city increased 7.7 percentage points to 79.7%, driving a 5.4% increase in RevPAR to US$41.66 despite a 4.7% decrease in ARR to US$52.25. Total Revenue per Available Room (TRevPAR) in the city was up 8.7% to US$75.51 on the back of an increase in food and beverage revenues with GOPPAR growing by 5.2% to US$32.8.
“The Cairo market has been resilient to continuous political upheaval with hotels in the city demonstrating they have recovered as performance indicators return to pre-revolution levels. However, hotels in Sharm el Sheikh appear to be struggling as market-wide rate reductions have introduced a price war affecting profit margins. Although occupancy in the region has increased, the slashing of rates has had a dramatic impact on their peak season’s profit margins” Commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Abu Dhabi hotels continued in their struggle to remain afloat as performance indicators fell further throughout the month of November. Although occupancy in the capital increased 0.2 percentage points reaching 83.5%, among the highest in the region, ARR shrunk 7.0% to US$202.72, reducing RevPAR by 6.8% to US$169.32. A significant decrease in food and beverage revenues coupled with a decline in conference and banqueting revenues saw TRevPAR drop 5.9% to US$316.31 with GOPPAR declining 8.2% to US$162.80.

“Hotels in Abu Dhabi continue to report strong occupancy levels; however bottom line performance continues to suffer due to the perpetual pressure on rates as a result of new competition. The capital city boasted the second highest occupancy rates in the region during November; conversely RevPAR remained subdued as hotels continue to lower their rates despite a steady growth in demand. Abu Dhabi’s occupancy was further aided by the hosting of the Abu Dhabi Grand Prix which attracted over 50,000 fans.” Commented Goddard

Dubai hotels post record demand, revenues and profits in November.

Dubai hotels registered the highest profit margins in 36 months, and Riyadh registered overall growth in the month of November according to the latest HotStats survey.

Occupancy across surveyed hotels in Dubai increased by 3.1 percentage points to 90.8% while ARR increased 1.6% to US$360.47 compounding a 5.2% increase in RevPAR to US$327.16. A 23.2% increase in meeting revenues coupled with a slight reduction in payroll costs aided a 12.3% improvement in GOPPAR to US$297.15, the highest in the region for the month and highest for the city in the last 36 months.

“Dubai airport has announced that passenger traffic is set to surpass the 2012 target of 56.5 million passengers almost reaching its capacity of 60 million passengers. Travellers from Western Europe flocked in to the city as a number of bank holidays such as All Saint’s Day and Remembrance Day resulted in extended breaks in the EU. A number of high profile events including the World Parachuting Championships and the Helishow, aided in drawing a large number of visitors to the city.” commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Hotels in Riyadh reported growth across all major performance indicators as an increase in occupancy and conferences food and beverage revenues boosted the bottom line yields. Occupancy and Average Room Rate (ARR) for the month of November posted a growth of 11.4 percentage points and 2.2% respectively, closing the month at 63.4% and US$265.22, boosting Revenue per Available Room (RevPAR) by 24.6% to US$168.20. This translated in Gross Operating Profit per Available Room (GOPPAR) being 36.8% higher at US$152.78, compared to the same period last year.

Hotels in Jeddah reported less than encouraging results for the month of November when compared to the same period last year which coincided with the busy Hajj season. Occupancy saw a 1.1 percentage point drop to 77.8%, however ARR increased by 2.9% allowing for a 1.4% increase in RevPAR to US$177.0. A 10.9% and 12.0% growth in food and beverage revenues respectively grew TRevPAR by 1.5% to US$279.79. An increase in payroll costs and operating expenses weighed heavily on the bottom line as GOPPAR dropped 7.7% to US$127.03.

A 0.3 percentage point increase in occupancy across surveyed hotels in Kuwait did little to counteract plummeting performance indicators. ARR in the city reduced by 19.5% to US$239.78, resulting in RevPAR levels falling by 19.0% to US$141.52 as the on-going protests in the country drove the leisure demand away, affecting the room rates. Although TRevPAR increased by 1.2%, higher operational costs resulted in a reduction of GOPPAR which dropped 9.1% to US$152.04.

“Intensified protests, sparked by recent political issues, caused nationwide panic which took a toll on hotel performances as high yielding leisure travellers avoided the city. Although the rate agreement provides a level of protection from demand variations, a sharp drop in leisure and group demand has an impact on top line revenues as hotels become heavily reliant on discounted corporate business. Although the events of November seem to have receded, the on-going political instability will have a strong bearing on the hotel performance in Kuwait as the hotel demand in the city is heavily driven by corporate and government sectors.” commented Goddard.