HotStats MENA Chain Hotels Market Review – February 2014
“Dubai’s stellar hotel performance continued in February as strong occupancy and increasing average rates resulted in Gross Operating Profits exceeding 50 percent of total revenue. Strong economic activity within the city coupled with a consistent rise in visitor numbers has driven demand for Dubai’s hotels, especially food and beverage demand with revenues increasing over 4.0 percent from the same period in 2013. The uplift in overall revenues directly impacted bottom line performance which reached US$ 282.09 per available room” commented Peter Goddard, Managing Director at TRI Hospitality Consulting in Dubai.
Abu Dhabi hotels struggled to remain afloat in February as average rates fell throughout the month. Although occupancy levels in the capital increased 3.3 percentage points reaching 80.2%, ARR plummeted 18.1% to US$162.46, reducing RevPAR by 14.6 percent to US$130.36. A significant decrease in food and beverage revenues coupled with a decline in conference and banqueting revenues saw TRevPAR drop 8.5% to US$273.68. A 2.5 percentage point rise in payroll costs caused a further profitability decline of 20.5% to US$90.83.
“Although hotels in Abu Dhabi continued to report strong occupancies, the market experienced an 18.1% decline in average rates compared to the same month last year. This was largely due to the exceptional performance witnessed during February 2013 when Abu Dhabi hosted IDEX, a biennial mega-event which allowed hotels to command significantly higher average rates. This year, the lower average rates significantly impacted room revenues that were further suppressed by increased rooms expenses and payroll costs. Limited improvements in cost controls witnessed through higher overhead costs and operating expenses caused profitability levels to plummet by over 20%” commented Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.
Kuwait hotels reported low performance
The low performance registered by Kuwait hotels in February was attributed to outbound travel during the national holiday which caused occupancy to slump 10.2 percentage points to 48.4%. A 1.2% rise in ARR to US$280.66 was insufficient to negate the fall in occupancy which drove RevPAR down 16.4% to US$135.91. Low corporate demand resulted in a 10.9% fall in conferencing and banqueting revenues which suppressed TRevPAR, causing it to decline 16.6%. A 2.7 percentage point rise in payroll costs coupled with a surge in operating expenses weighed heavily on the bottom line as GOPPAR plummeted 26.7% to US$116.03.
“Hotels in Kuwait were heavily impacted by the extended national and school holidays that resulted in reduced corporate demand and an outflow of residents. The 10 day ministry holiday prompted residents to travel to other regional destinations such as Jeddah and Dubai, with Kuwait witnessing limited internal activities. With the government and corporate segment comprising the majority of demand, the decline in activities resulted in lower dining and conferencing revenues, causing departmental profits to drop 20.7%. Additionally, higher payroll costs across all major operating departments drove bottom line profits to fall 26.7%, as Kuwait witnessed a substantial decline in GOPPAR across all regional markets surveyed by HotStats” commented Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.
Hotels in Sharm El Sheikh hit hard by militant insurgency
Sharm El Sheikh hotels reported discouraging results for the month of February, as a decline was witnessed across all key performance indicators. Occupancy saw a 1.0 percentage point drop to 57.7%, while ARR declined 10.9% to US$38.44 and caused RevPAR to fall 12.4% to US$22.20. Hotels continued to struggle to remain afloat due to further rate reductions, as the tourism minister initiated the development of affordable travel packages to encourage domestic tourism. Lower non-room revenues caused TRevPAR to incur a double digit decline of 11.7% to US$46.04 and when coupled with a 4.8 percentage point rise in payroll costs, profitability plummeted 41.7% to US$9.48.
“The hotel industry in Egypt has struggled to recover from the popular uprisings that have resulted in a prolonged period of political and civil unrest. Tourist arrivals declined 28% during the first two months compared to 2013, while RevPAR fell 15.7% across the same period. Lower arrivals were due to a 58% reduction in visitors from Arab countries, followed by a 24% decline from European source markets that primarily visit the Red Sea resorts. The South Sinai suicide bombings during February have caused the security situation to deteriorate at the Red Sea resorts which had previously remained isolated from militant insurgency. The attack caused several European countries to issue warnings against travelling to Sharm El Sheikh, while major German tour operators including Alltours, DER, TUI and Thomas Cook organised early departure of their clients’, commented Goddard.
Jeddah hotels registered positive performance
Hotels in Jeddah reported growth across all major performance indicators as an increase in average rates and non-room revenues boosted the bottom line yields. Occupancy for the month posted a growth of 1.5 percentage points to 79.3%, rising for the fourth consecutive month. Average Room Rates increased 5.2% closing the month at US$252.22 and boosting RevPAR by 7.2% to US$199.98. Increased revenues from food and beverage consumption, along with higher conferencing revenues led to TRevPAR growth of 6.7%. Strong top-line revenues coupled with reduced operating and payroll costs boosted GOPPAR 7.7% to US$145.76.
“February is typically a strong month for hotels in Jeddah, as it marks the advent of peak season that continues in the following months. Jeddah is heavily driven by corporate activity which resumed following the December and January holidays that saw quieter hotel performance. The hosting of several events including the Saudi Travel and Tourism Exhibition and Saudi Arabia’s International Machinery and Equipment Exhibition in the beginning of this year marked the return of corporate demand. Hotels reaped the benefits of increased corporate demand with higher food and beverage consumption, coupled with conferencing and banqueting revenues growing 5% from the previous year” commented Peter Goddard.
The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate primarily in the four and five-star sectors.
Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.
Occupancy (%) is that proportion of the bedrooms available during the period which are occupied during the period.
Average Room Rate (ARR) is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room RevPar (RevPAR) is the total bedroom revenue for the period divided by the total available rooms during the period.
Total RevPar (TRevPAR) is the combined total of all revenues divided by the total available rooms during the period.
Payroll % is the payroll for all hotels in the sample as a percentage of total revenue.
GOPPAR is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
TRI Hospitality Consulting Middle East provides a wide range of services to clients in the hotel sector. For more information visit
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