HotStats MENA Chain Hotels Market Review – October 2013

As Dubai entered its high season, overall performance levels increased from the previous year, despite a 2.0 percentage points decline in occupancy at 83.4 percent. However this month occupancy still exceeded the level witnessed year to date by 3.5 percentage points. ARR increased by 9.4% to an astounding US$396.87 driving RevPAR up 6.8% to US$330.80 and when coupled with higher operating profits boosted GOPPAR 7.6% to US$280.70, the highest out of the five MENA markets surveyed by HotStats this month.

"The growth in Abu Dhabi's top line performance was attributed to the city hosting a number of high profile international events, including the Abu Dhabi Film Festival and the FIFA U-17 World Cup which attracted nearly 80,000 visitors during the first two weeks of the competition. Furthermore, corporate and MICE activities resumed as the capital hosted several international medical conferences. Leisure tourism was propelled in the wake of Eid Al Adha holiday, as the city provided a variety of family-friendly shopping and entertainment options. Similarly, Dubai was able to capitalise on demand through an increase in average rates which jumped 9.4%. The holidays helped Dubai attract strong demand from visitors within the region and Saudi Arabia in particular, while MICE activity returned to the market as the city hosted several events including Cityscape Global" commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

In October, four and five star hotels in Doha recorded occupancy growth that was driven by a rise in corporate and leisure demand. Occupancies increased marginally to 68.7%, up 1.1 percentage points while Average Room Rate (ARR) dropped 6.5% to US$237.06, leaving the RevPAR for the month 5.0% lower at US$162.95. The 4.2% decline in Total Revenue Per Available Room (TrevPAR) was attributed to lower food and beverage consumption, coupled with a substantial decline in conferencing revenues. Higher operating costs coupled with a rise in payroll expenses drove profitability 10.5% lower than the previous year to US$197.41.

"Occupancies in October reached 68.7% and exceeded levels seen year to date due to the influx of demand through corporate events and the Eid Al Adha holidays which attracted over 65,000 tourists from the Gulf countries. Although occupancies in Doha increased marginally due to the events, average rates remained under pressure from high levels of competition and subdued profitability which incurred negative growth from the previous year" stated Peter Goddard.

Negative hotel performance in Cairo is caused by political strife

Top and bottom line performance in Cairo hotels continued to suffer due to ongoing political unrest. Hotel occupancies in the capital remained subdued at 31.5% for the month, 23.2 percentage points lower than the previous year, although average rates have risen 5.0% to US$ 112.59. Despite the improvement in ARR, occupancy drove the 39.5% decline in RevPAR to US$ 35.44 which filtered through to the bottom line. With payroll increasing by 9.9 percentage points, GOPPAR fell by 47.2% to US$28.09.

"Although occupancies have gradually recovered from levels witnessed at the lowest point of 2013 when the coup d'etat took place in July, they remain 23.2 percentage points lower than the prior year. This reinforces the detrimental impact that political instability has had on hotel performance and is a considerable setback in Egypt's recovery process following the initial uprisings seen in 2011. The rise in ARR may partially be attributed hoteliers' maintaining rates, however, it is primarily driven by increased inflation and a sharp depreciation of the Egyptian pound relative to the US dollar" commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

In Saudi Arabia, the culmination of Jeddah's tourist season was marked by the arrival of this year's Eid al Adha holiday in October. Hotels reported average occupancy of 77.3%, which was 1.2 percentage points lower than last year, while ARR also declined marginally by 0.2% to US$251.09, dropping RevPAR to US$194.00. A rise in food and beverages revenue was not sufficient enough to negate a decline in conferencing revenues which left TrevPAR at US$300.54 (-0.8%) and pushed the bottom line performance down by 4.2% to US$139.15.

"Jeddah suffered a slight drop in demand during October as peak season began to recede and the market witnessed the effects of seasonality. The decline in domestic leisure tourism corresponded to reduced performance across all key indicators, albeit at minimal levels. While the Eid al Adha holidays helped to sustain demand and attracted domestic tourists, the large number of residents travelling to other regional destinations impacted hotel performance in Jeddah. Reduced occupancy levels and average rates impeded profitability which remained below levels seen during year" commented Peter Goddard.