HotStats MENA Chain Hotels Market Review – August 2013
UAE hotels reverse the summer slump with strong performance during August
Hotels in Abu Dhabi posted a 31.3 percent growth in RevPar in August as demand was elevated by successful government-initiated tourism promotions, according to the latest HotStats survey of full service hotels in seven MENA cities by TRI Hospitality Consulting Middle East.
Average occupancy at four and five star chain hotels in the city reached 63.1 percent, growing by 12.4 percentage points, while Average Room Rates (ARR) increased to US$112.12, up by 5.5 percent compared to the same period last year. As a result, Revenue Per Available Room (RevPAR) for the month increased by 31.3 percent to US$70.74 while Total Revenue Per Available Room (TRevPAR) increased by 24.2 percent to US$159.00. However, the effect of a 7.7 percentage points decrease in payroll costs drove Gross Operating Profit Per Available Room (GOPPAR) up from the previous year to US$13.21.
“SummerFest Abu Dhabi is a summer promotion initiated by the Abu Dhabi Tourism and Culture Authority intended to increase the number of visitors from within the region. The authorities announced a five week extension on the Thrilling Stays hotel deal that offers entry to Yas Waterworld and Ferrari World on Yas Island. Over 40 hotels were involved in this family-orientated package that continued to raise the city’s profile as a regional leisure destination” commended Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.
Hotels in Dubai saw positive performance as the city hosted a plethora of events and activities surrounding the Eid in Dubai campaign, in addition to the FINA World Junior Swimming Championships. The Eid Al Fitr weekend recorded stronger occupancy and average rates than those seen during the corresponding period of 2012 and elevated performance for the remainder of August. An 11.3 percent rise in ARR to US$228.99 coupled with an 8.5 percentage points rise in occupancy to 71.3 percent drove RevPAR up by 26.4 percent to $163.35 during the month. A 20.1 percent growth in TrevPAR drove a 98.3 percent increase in GOPPAR to US$ 70.63.
“Eid in Dubai marked the culmination of the second phase of the Summer is Dubai campaign that resulted in a substantial growth in visitor numbers, primarily driven by regional demand. The three day Eid holiday is traditionally the busiest weekend of the year, with GCC source markets contributing to the vast majority of foreign visitors driving the occupancy at four and five star hotels upwards of 90 percent. The overall growth witnessed throughout the city is also attributed to Dubai diversifying its entertainment offering to attract visitors through a vast array of shows and events” commented Goddard.
The Eid holidays also benefitted the Kuwait hotel market through increased leisure demand generated from domestic and Saudi visitors. Occupancy increased 3.4 percentage points 37.0 percent while ARR grew 12.0 percent to US$271.72, causing a 23.3 percent increase in RevPAR during the month. Despite low occupancy levels, average rates for the month of August exceeded year-to-date levels of US$269.48, illustrating the strength of the unofficial rate agreement on the market. Growth in food and beverage revenues resulted from increased expenditure of the Eid holidaymakers as well as the conclusion of the Holy Month of Ramadan. Coupled with a decline in payroll costs, the rise in revenues filtered through to the bottom line, with GOPPAR increasing 61 percent to US$86.54.
Cairo hotels continue to suffer as civil unrest pushes occupancy to the lowest level since 2011
The ousting of former President Mohamed Morsi reinforced Egypt’s political divide that instigated violence in Cairo. Political unrest has left a detrimental impact on the country’s tourism industry, with occupancy levels in the capital declining 22.1 percentage points to 20.4 percent, driving RevPAR 44.7 percent lower to US$ 24.41. Due to the depreciation of the Egyptian pound against the US dollar, low performance was not reflected in average rates which grew 15.2 percent to US$ 119.62. The plummet in TrevPAR and increase in operating profits corresponded to GOPPAR declining 96.9 percent to US$ 1.13.
The security situation in Cairo did not impact Sharm El Sheikh as heavily, as the majority of bookings were obtained through tour operators earlier in the year. With rates generally secured in the Red Sea destination, ARR increased 13.4 percent to US$ 52.66. However, occupancy was 12.7 percentage points lower compared to the same period last year and caused RevPAR to decline 7.2 percent to US$30.10. The 9.6 percent reduction in TRevPAR, coupled with an increase in operating expenses resulted in GOPPAR levels declining 28.2 percent to US$ 16.43.
“The political chaos experienced in Egypt during August resulted in extensive travel warnings by countries in the GCC as well as France and the US. Additionally, Russia prohibited tour operators from selling holidays to the country while market-leading tour operators in Germany cancelled holidays bought until mid-September. The security situation will continue to negatively impact the tourism industry and the ramifications of tour operators cancelling trips will be seen on room rates in following months” commented Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.
Jeddah recorded the lowest occupancy levels of the year due to intensive competition from other regional destinations such as Dubai and Abu Dhabi. Although average rates increased 6.2 percent to US$ 273.54 during the month, a 10.1 percentage point drop in occupancy to 69.0 percent dragged the RevPAR down by 7.3 percent to US$188.85. The decline in top line revenues coupled with the 7.0 percent retraction in TRevPAR resulted in GOPPAR falling 12.8 percent to US$139.73.
After several months of low performance due to the effects of seasonality, RevPAR showed improvements in Riyadh during August. Occupancy increased by a marginal 1.5 percentage points to 32.0 percent and average rates grew 4.6 percent to US$226.02 driving RevPAR upwards by 9.9 percent to US$72.30. Nonetheless, low operating profits and higher payroll costs resulted in a fall in GOPPAR to US$37.93.
“During Eid-al-Fitr is traditionally one of the busiest periods for leisure destinations as visitors take advantage of extended holiday periods. However, Jeddah recorded a reduction in occupancy during the month as other regional destinations namely Dubai and Abu Dhabi targeted Saudi Nationals. While performance improved marginally in Riyadh, it remained subdued due to low corporate demand incurred during Ramadan and the Eid, however the market is expected to pick up as business and government activity returns to normal.” stated Peter Goddard.
The MENA Chain Hotels sample is composed of 108 hotels with an average hotel size of 325 bedrooms.
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 http://www.trimideast.com/
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