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Occupancy uplift drives profit growth for MEA hotels

DUBAI, January 30, 2018

An uplift in room occupancy levels helped drive growth in revenue and profit for hotels in the Middle East and Africa in December, and marked a positive end to a year of mixed results for the region, according to the latest worldwide poll of full-service hotels from HotStats.

Although hotels in the Middle East & Africa suffered a 2.9 per cent drop in achieved average room rate in December, to $189.18, a 3.1-percentage point increase in room occupancy, to 66.6 per cent, helped drive a 1.8 per cent increase in RevPAR, to $125.94.

Whilst an increase in volume was achieved across most segments, it was at the expense of a decline in achieved average room rate in the Residential Conference (down 4.6 per cent), Individual Leisure (down 8.2 per cent) and Group Leisure (down 9.2 per cent) sector rates.

The uplift in volume contributed to an increase in non-rooms revenues, including food and beverage (up 5.0 per cent) and conference and banqueting (up 4.1 per cent), which supported a 2.3 per cent increase in TrevPAR in December, to $225.14.

In addition to the growth in TrevPAR, profit levels at hotels in the Middle East & Africa were further boosted by a 0.7-percentage point saving in Payroll, which fell to 23.3 per cent.

As a result of the movement in revenue and costs, GOPPAR at hotels in the region increased by 3.5 per cent in December, to $95.63, which was equivalent to a profit conversion of 42.5 per cent of total revenue.

“The diversity of hotel markets across the Middle East & Africa and their key demand drivers means it always going to be a mixed bag of top and bottom line performance, but this year has been particularly volatile due to the ongoing oil crisis, political and economic instability and security concerns.

It is therefore pleasing to report such a positive month of trading for hotels in the region at the end of 2017 and we look forward to profit performance recovering further in 2018,” said Pablo Alonso, CEO of HotStats.

Amongst the strong performing hotel markets in December was Abu Dhabi, which bucked its own 2017 trend of falling revenue and profit levels, to record a 15.9 per cent increase in GOPPAR.

The growth in revenue was led by a 9.0 per cent increase in RevPAR, to $117.33, as hotels in Abu Dhabi successfully recorded an increase in both room occupancy (up 3.6 percentage points) and achieved average room rate (up 4.0 per cent).

Abu Dhabi
For hotels in Abu Dhabi, the growth in top line revenues in December was almost entirely driven by the commercial segment, illustrated by the year-on-year increases in achieved rate in the Residential Conference (up 41.6 per cent) and Corporate (up 6.3 per cent) segments, but was at the expense of a decline in the Leisure segment.

A number of major conferences hosted at ADNEC helped to drive demand for hotel accommodation in the UAE capital in December, including the International Diabetes Federation congress, which attracted more than 7,500 attendees.

In addition to the growth in rooms revenue, increases in non-rooms revenues helped hotels in Abu Dhabi to record a 4.8 per cent increase in TrevPAR, to $220.18.

The growth in top line revenues, as well as cost savings, which included a 2.2-percentage point drop in Payroll, contributed to GOPPAR increasing to $78.66 in December.

In contrast to the performance of hotels in Abu Dhabi, political and economic challenges in Qatar continue to negatively impact the performance of hotels in the capital, Doha, which in December contributed to the plummeting top and bottom line performance levels.

For hotels in Doha, a 2.4-percentage point decline in room occupancy, to 61.0 per cent, as well as a 7.8 per cent decline in achieved average room rate, to $163.08, contributed to the 11.4 per cent year-on-year decline in RevPAR, to $99.40.

Doha
In addition, hotels in Doha suffered declines in non-rooms revenues, including food and beverage (down 6.1 per cent) and conference and banqueting (down 8.1 per cent), which contributed to the 8.3 per cent drop in TrevPAR, to $286.37.

The decline in revenue levels was further exacerbated by rising costs, which included a 1.9-percentage point increase in Payroll, to 29.6 per cent of total revenue. As a result, GOPPAR at hotels in Doha fell by 20.5 per cent year-on-year to $81.08 for the month of December.

“Despite the sanctions imposed by neighbouring countries, economic growth in Qatar remained surprisingly robust in 2017, with further growth anticipated in 2018. However, the growth has primarily been through the construction sector and spurred by government-led initiatives; meanwhile, the tourism industry has been left floundering, evidenced by the performance of hotels in Doha this month,” added Pablo. - TradeArabia News Service




Tags: hotels | profit | growth | MEA | Occupancy |

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