Middle East and North Africa chain hotels market review released


The latest market review of the Middle East and North Africa chain hotels was released today. According to the report, cost savings can’t stop profit drop at Abu Dhabi hotels.

Despite significantly reducing both overhead and labour costs, hotels in Abu Dhabi were unable to offset the decline in revenue across the major operating departments this month and as a result year-on-year profit per room dropped by 6.9%, according to the latest data from HotStats.

In addition to a 3.7% drop in RevPAR (Revenue per Available Room), a decrease in Food and Beverage (-11.1%) as well as Conference and Banqueting (-25.4%) revenue on a per available room basis, contributed to a 7.8% decline in TrevPAR (Total Revenue per Available Room) at hotels in the UAE capital in May.

Whilst savings were made in labour (-8.5%) and overhead (-4.8%) costs, hotels in Abu Dhabi suffered further year-on-year declines in profit per room in 2016 and year-to-date, GOPPAR (Gross Operating Profit per Available Room) has now fallen by 11.5% to $83.61. Despite this, hoteliers are still maintaining a respectable 33.4% profit conversion.

Cairo Hotels Profit Performance Continues to Grow Amid Challenging Conditions

Year-on-year profit per room at hotels in Cairo increased by 33.3% in May, despite the city facing ongoing challenges to its business and leisure visitor profile.

The EgyptAir plane crash this month was the latest in a number of incidents which are likely to impact top line performance at hotels in the Egyptian capital, alongside the hijacking of the EgyptAir flight in March and challenging economic conditions following years of political turmoil.

However, the hotel market in Cairo remains buoyant, with hoteliers achieving a 30.7% increase in RevPAR for the month as a result of growth in both occupancy (+9.5 percentage points) and achieved average room rate (+13.9%) to $117.92.

The growth this month contributed to a 25.5% year-to-date RevPAR increase, which has been fuelled by a particularly strong performance in the commercial segment, with the uplift in May contributing to increases in the achieved rate in corporate (+12.8%) and residential conference (+53.1%) segments in the five months to May 2016.
On a rolling 12-month basis, hotels in Cairo have now recorded a 136% increase in profit per room over the last 22 months, to $55.45 in the 12 months to May 2016 from $23.51 in the 12 months to July 2014.

Key Events Give Jeddah Hotels Respite from Profit Decline

Hotels in Jeddah recorded a 47.6% year-on-year uplift in profit per room in May as high volume levels as a result of key events enabled hoteliers to leverage top line performance.

Events such as the FM Expo, Outdoor Design & Build Show and The Hotel Show enabled hoteliers in the Saudi capital to record a 10.8 percentage point uplift in occupancy as well as a 24.5% increase in achieved average room rate, which contributed to a 42.9 % increase in RevPAR.

It was a welcome uplift in performance for hotels in Jeddah, which have suffered consecutive months of profit decline since September 2015, contributing to a 12.7% drop to $148.21 in the 12 months to April 2016.

Top line growth was fuelled by a 76.7% increase in the achieved rate in the ‘Other’ segment, to $454.49 this month from $257.15 during the same period in 2015, with the segment accounting for 33.2% of all revenue from the rooms department. This was in addition to the 22.1% of rooms revenue derived from the residential conference segment.
Despite year-on-year growth in May, year-to-date GOPPAR at hotels in Jeddah remains 9.8% behind 2015 performance at $132.84.