A 130 percent year-on-year increase in profit per room at Cairo hotels in January continues the strong performance of hotels in the Egyptian capital in the last 24 months, according to the latest data.
Further to the 32.3% increase in 2015, hotels in Cairo recorded a 49.4% increase in profit per room in 2016, which was primarily due to a 36.3% increase in RevPAR (Revenue per Available Room), fuelled by a 17.2% increase in achieved average room rate, to $62.34.
Further to the challenging periods of operation following the Arab Spring and security threats in recent years, confidence in the city has returned, and this month hotel accommodation demand was boosted by the Egyptian capital hosting the 9th BGIICC Medical Conference.
Demand from this event helped fuel the 8.7 percentage point increase in occupancy (to 70.5%), in addition to a 96.6% year-on-year increase in achieved average room rate, which contributed to the 124.4% year-on-year increase in RevPAR, to $70.80.
The recovery in hotel performance in Cairo in recent years is no better illustrated than in the 252.0% increase in GOPPAR (Gross Operating Profit per Available Room) over the last 36 months to $37.36 in the 12 months to January 2017, from $10.61 during the same period in 2013/14.
Rooms Profitability Sliding Away in Jeddah
Rooms profit per room at hotels in Jeddah continued its decline this month, falling by 32.0% year-on-year as the increase in Rooms Costs continues to exceed the growth in Rooms revenue at hotels in Saudi Arabia’s second biggest city.
Whilst hotels in Jeddah were able to successfully record a 1.4% increase in achieved average room rate in the 12 months to January 2017, this was cancelled out by a 5.0 percentage point decline in room occupancy, to 71.4%, as the oil crisis continues.
Furthermore, the $4.05 increase in achieved average room rate in the last year has been entirely wiped out by a $4.25 increase in Rooms Cost of Sales, to $9.96, as this cost is now equivalent to 4.6% of Rooms Revenue. The 74.4% increase in Rooms Cost of Sales in the 12 months to January 2017 suggests, hotels in Jeddah have turned to Online Travel Agents to help boost demand.
As a result of the movement in Rooms Revenue and related costs, Rooms profit per room at hotels in Jeddah has dropped by 7.2% in the last year to $177.86, which was in spite of savings in Rooms payroll (+8.5%) and Rooms Expenses (+7.4%).
Riyadh Struggles to Stop the Rot as Profit Continues to Dive
Further to the 24.0% drop in profit per room in 2016, hotels in Riyadh suffered a 16.2% year-on-year decline in profit in January suggesting there is further woe to come in 2017.
The 13.9% decline in RevPAR at hotels in Riyadh, was further exacerbated by falling revenues in other departments, including Food and Beverage (-15.0%) and Conference and Banqueting (-20.1%) on a per available room basis and resulted in a 14.3% drop in total revenue for the month.
Whilst hotels in Riyadh are attempting to stop the rot by reducing their cost base, evidenced by the savings in Payroll (+10.2%) and Overheads (+10.5%), plummeting top line performance is a continued cause for concern.
Since peaking at $149.60 in the 12 months to May 2015, RevPAR at hotels in Riyadh has fallen by 12.2% to $126.12 in the 12 months to January 2017. This has subsequently led to a 24.4% drop in profit per room during the same period as low oil prices continue to stifle economic growth.