HotStats MENA Chain Hotels Market Review – January 2014
Hotels in Abu Dhabi and Dubai record a surge in revenues as tourists flock to the UAE
Hotels in Abu Dhabi posted double digit growth in Revenue Per Available Room (RevPAR) in January on the back of strong growth in occupancy levels and Average Room Rates (ARR), according to the latest HotStats survey of full-service hotels in five MENA cities by TRI Hospitality Consulting.
5.4 percentage points to 74.7%. The combined effects of a rise in both performance indicators drove RevPAR growth by an impressive 16.0% and closed the month at US$123.37. The increase in Average Room Rates was primarily driven by the corporate and conferencing segments as a result of demand generated from high profile events such as the Abu Dhabi HSBC Golf Championship and Abu Dhabi Sustainability Week. The growth in the top line, combined with a 2.6 percentage point drop in payroll costs, resulted in a 35.9% surge in profit margins during the month as the Gross Operating Profit Per Available Room (GOPPAR) reached US$86.88.
"January is typically a robust month of performance for hotels in Abu Dhabi and this year was noexception as continued growth was seen across all key indicators. According to Abu Dhabi Airports Company, Abu Dhabi International Airport received 1,564,266 passengers in January, marking a rise of 14.5 percent from the previous year that corresponded to the continued expansion of Etihad Airways. In addition to benefitting from international passenger growth, Abu Dhabi also hosted a number of high profile events that boosted international visitor numbers. A series of packages were developed for the Abu Dhabi HSBC Golf Championship, as hotels partnered with other travel industry members to cultivate the golf travel segment and strengthen Abu Dhabi's foothold as an international golf destination" commented Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.
Record-high air passenger traffic helped hotels in Dubai maintain robust performance levels during themonth of January. Occupancy levels in Dubai reached 86.3% and ARR increased by 10.8% to US$402.15 during the month, boosting RevPAR by 9.5% to US$347.17. Higher average rates were largely attributed to higher yield from the leisure segment, as visitors took advantage of holidays such as the Orthodox Christmas and New Year and the extended New Year break in China. The growth in the top line revenues, coupled with a decline in operating expenses, drove an increase in profits during the month as GOPPAR reached US$302.94, up by 10.4% over the same period in 2013.
"Hotels in Dubai successfully yielded higher average rates on the back of strong leisure demand duringthe month of January. The growth in hotel performance also came in the wake of a number of key occasions including the Orthodox Christmas and New Year which attract substantial demand from Russia and the CIS market. In addition, the annual Dubai Shopping Festival occurred throughout the entire month of January and based upon initial estimates saw a 5.0 to 10.0% rise in shoppers, with the GCC and East Asia maintaining their position as the top source markets", commented Goddard.
Doha hotels reported a 10.9 percentage point growth in occupancy in January and closed the monthwith an average occupancy of 70.5%, however, ARR dropped 1.2% to US$225.37. RevPAR witnessed impressive growth of 16.9% to US$158.91 solely driven by the double digit rise in occupancy levels. The growth in guests contributed to a 16.9% rise in food and beverage profits, which reached US$74.7 per available room. Overall, hotels in Doha reported a 14.0% growth in Total Revenue Per Available Room (TRevPAR) and coupled with a reduction in payroll costs, profitability surged 24.2% to US$156.21.
"The increase in profit levels experienced by the hotels during January was attributed to stronger roomrevenues as a result of increased demand in January. Additionally, a rise in food and beverage consumption which comprised 44.5% of total revenues further impacted the bottom line. However, rising competition in the city continues to impede further growth in profits as new entrants launch aggressive strategies in order to penetrate the market", commented Peter Goddard, Managing Director of TRI Hospitality Consulting.
Riyadh hotels saw a drop in performance during January which was driven by a 14.2% drop in ARR.Although occupancies increased 3.9 percentage points to 58.1%, the growth was insufficient to negate the impact of falling average rates as the city witnessed an 8.1% decrease in RevPAR to US$142.91. A sharp decline in conferencing and food revenues coupled with payroll costs rising 2.6 percentage points, led to GOPPAR recording an 18.6 percent decline to US$105.23.
"Business activity in Riyadh slowed during January as holidays impacted hotels which rely heavily uponcorporate demand. Average rates originating from the leisure segment increased 58.0% to a remarkable US$548.88 in January, however, the growth did not significantly impact ARR, as leisure demand accounts for 12.5% of total demand in Riyadh" commented Peter Goddard.
Kuwaiti hotels registered an 8.0 percentage point drop in occupancy to 51.8% on the back of lowerdemand in the city. Although ARR increased 10.3% to US$315.63, the decline in occupancies drove RevPAR down 4.4% to US$163.62. Furthermore, a decrease in food, beverage and conferencing revenues subdued TRevPAR growth which fell 6.2% to US$360.45. In conjunction with lower top line revenues, a one percentage point rise in payroll costs impeded profitability levels which dropped 7.7% to US$186.79.
"Although average room rates increased during January, the decline in demand, particularly from thecorporate segment, resulted in RevPAR falling 4.4%. This decline in top revenues directly impacted profits levels which fell 7.7% from the previous year. Furthermore, food and beverage demand which is largely driven by the local residential population also fell, indicating a significant proportion of the local population travelling outside Kuwait during the month", commented Peter Goddard, Managing Director of TRI Hospitality Consulting.
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