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12.7pc DROP IN ROOM RATE

MEA hotel revenues hit five-year low in July

LONDON, September 7, 2017

Hotels in the Middle East & Africa (MEA) saw revenue per available room (RevPAR) figures drop to a five-year low in July, according to a survey.

Data collected by HotStats showed that July marked a low in recent top and bottom line performance as demand levels remained soft during the stifling summer months in the region.

While hotels in the Middle East & Africa recorded a 1.0 percentage point increase in room occupancy in July, to 60.4 per cent, it was at the expense of a 12.7 per cent drop in achieved average room rate, to $140.73, as low demand levels forced hoteliers to discount rates in an attempt to drive top line revenues.

However, as a result of the movement in volume and price, RevPAR at hotels in the region dropped to a monthly five-year low of $84.98, which surpasses the previous low of $93.57 recorded in June 2016.

Further woe was heaped on to hoteliers in the Middle East & Africa as declines in non-rooms revenues, including food and beverage (down 6.2 per cent) and conference and banqueting (down 1.0 per cent), contributed to the 9.1 per cent year-on-year drop in TrevPAR, to $149.31. Again, this represented a recent historic low in this metric for hotels in the region.

Although hotels in the Middle East & Africa did their utmost to arrest escalating costs, payroll levels increased by 3.2 percentage points, to 34.5 per cent of total revenue, punctuating a poor month of performance with gross operating profit per available room (GOPPAR) recorded at just $35.47.

Profit per room this month was at the lowest level recorded in recent years and was 51.8 per cent below the average for the 12-months to July 2017, at $73.63. As a result, profit conversion at hotels in the Middle East & Africa fell to a low of just 23.8 per cent of total revenue.

“The poor profit conversion this month will be unfamiliar to hoteliers in the Middle East & Africa who have become accustomed to recording punchy bottom line performance.

"However, much to the disappointment of hotel owners and operators in the region, the challenging market conditions are likely to continue in the short term. This is not only due to the laboured recovery of the oil industry, but many of the new hotel developments which were either late in the planning stages or had already broken ground when the crisis hit, are now coming to fruition,” said Pablo Alonso, CEO of HotStats.




Tags: hotel | Africa | Revenues | drop | July | Middle | East |

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