HotStats MENA Chain Hotels Market Review – March 2014
Abu Dhabi occupancy levels continue to rise on the back of strong tourist demand
Hotels in Abu Dhabi capitalised on a surge in demand during March, boosting profits by 14.3%, according to the latest HotStats survey of full-service, four and five star hotels by TRI Hospitality Consulting Middle East.
Abu Dhabi hotels reported growth in key performance indicators throughout the month of March, as
a 4.3 percentage point increase in hotel occupancies coupled with a 2.2% increase in Average Room Rate (ARR) to US$157.76 lifted Revenue per Available Room (RevPAR) by 7.8%. Conference and banqueting continued to provide a strong demand base for the city’s hotels, with ARR being driven by rate growth within corporate and conferencing segments of 12.4% and 9.7%, respectively. A decline in food and beverage consumption softened Total Revenues per Available Room (TRevPAR) to an increase of 4.0% to US$274.74, however strong top-line revenues coupled with lower payroll costs and operating expenses boosted Gross Operating Profit per Available Room (GOPPAR) by 14.3% to US$103.92.“Abu Dhabi has witnessed a consistent rise in demand during the first quarter of 2014, with
occupancies increasing 4.4 percentage points to 79.1%. The expansion of Etihad Airlines helped draw over 4.5 million passengers to Abu Dhabi International Airport during the first quarter which saw passenger numbers rise 15.1% from the previous year. The leisure segment experienced the highest growth in demand during the first quarter of 2014, with recreational facilities on Yas Island and Saadiyat Island generating increased demand for hotels in the capital” commented Peter Goddard, Managing Director of TRI Hospitality Consulting.Doha hotels suffered from a double-digit decline in ARR in March to US$222.17, as greater
competition for corporate demand impacted rates. Although the city experienced a 5.9 percentage point rise in occupancy to 75.2%, it was insufficient to negate the impact of a 14.9% decline in average rates which left RevPAR 7.6% lower compared to the previous year. A heavy reduction in non-room revenues derived from softer food and beverage consumption was further exacerbated by lower conferencing revenues, causing TRevPAR to fall 7.7%. The decline in both line items impacted the bottom line profits, which fell 10% to US$181.34.“Hotels in Doha have seen a recent slide in profit margins primarily caused by decreasing average
rates. The mixed performance witnessed in March was ultimately driven down by lower rates, even though overall demand increased. Food and beverage operations contribute a significant proportion of revenues, generating approximately 45.0% of total revenues. However, as food and beverage operations have higher operating costs, the lower performance levels, particularly from conferences and banqueting is placing additional pressure on overall profitability margins” commented Peter Goddard.MICE activity pushes occupancy to 72.5% in Riyadh
Riyadh hotels which have seen demand climbing during the first three months of the year, with
occupancies increasing 6.3 percentage points over the same period last year. The market witnessed a 10.7 percentage point rise in occupancy levels in March reaching 72.5%, offsetting a 4.4% decline in average room rates to drive RevPAR up 12.1% to US$185.40. While room revenue has been on the rise for the first quarter of the year, food and conferencing revenues recorded a decrease year- to-date. This saw food revenues incur the most substantial decline in non-room revenues of 22.1% to US$109.22 per let room during the month. The rise in direct expenses across all departments coupled with higher payroll costs left GOPPAR marginally lower than the previous year at US$147.92.“Riyadh hoteliers enjoyed a boost in demand during March, which helped drive an increase in first
quarter occupancy levels to 66.7%. The corporate and conference markets continue to provide hotels with a solid base of demand driven by government spending on key infrastructure projects in the capital including the Riyadh Metro. Average rates declined by 4.4% in March putting continued pressure on year-to-date figures, which fell 8.3% on the back of increased competition. Profit margins also remained under pressure as rising payroll expenses resulted in an 8.5 decline in GOPPAR.” commented Goddard.Dubai hoteliers witness profits rise to 53.3% during the first quarter of 2014
Dubai hotels experienced mixed performance during the month of March, however first quarter
performance remains strong with a 4.5 percent increase in RevPAR. Although hotels experienced a marginal reduction in ARR and occupancy during March compared to the same period last year, occupancies and average rates remain the strongest in the region at an impressive 88.4% and US$ 398.71. A 5.6% rise in average rates this year has boosted profit margins with GOPPAR increasing 4.6 percent to US$305.02 or 53.3 percent of total revenue.“The Dubai hotel market continues to grow at an impressive rate, with average rates in the first
quarter of 2014 increasing 5.6 percent to US$ 389.99. Although the market witnessed stagnant performance during March, the strong growth experienced in January and February ensures the market maintains positive heading into the summer period. A 4.4% rise in total revenues coupled with slight reductions in operating expenses allowed the market to achieve an impressive 53.3% profit margin or US$ 305.02 per available room” commented Goddard.Profitability in Cairo drops 21.9% during the first quarter of 2014
Cairo hotels struggled to recover from the impact of the popular uprisings and related violence that
was endured in 2013. Occupancy levels for full-service hotels in the capital fell to 39.0% during March, down 2.9 percentage points from the same period last year. However a 3.2% growth in ARR to US$113.50 was insufficient to offset the decline in demand resulting in a 3.8% drop in RevPAR to US$44.25. Despite a slight rise in non-room revenues, increased departmental operating expenses and payroll costs resulted in a 5.0% decline in GOPPAR to US$ 34.11.“Hotel performance in Cairo continues to deteriorate in 2014, with lower demand impacting tourism
throughout Egypt as tourism revenues fell 43% during the period. While hoteliers have attempted to maintain stable performance levels, high operating expenses coupled with a surge in payroll costs caused profitability to fall 21.9% year-to-date. Hoteliers have shifted their focus to rate performance in order to improve profitability and balance the losses incurred from reduced demand. The short- term outlook for hotel profitability remains concerning, with further declines in tourist numbers expected over the coming months.” 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.
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