HotStats MENA Chain Hotels Market Review – December 2014
Dubai hotels close 2014 with a 4.2% increase in profit margins
Dubai’s four and five star hotels maintained strong performance levels during the month of December with revenue per available room (RevPAR) increasing by 2.2% to US$308.26. The growth in rooms revenue was driven by a marginal growth in average room rate (ARR) which rose by 0.4% to US$375.11, coupled with a 1.4 percentage point increase in occupancy to 82.2%. Higher F&B and conferencing revenues drove a 3.5% increase in total revenue per available room (TRevPAR) to US$573.30 and supported profitability, as gross operating profit per available room (GOPPAR) increased by 4.0% to US$286.33.
“Dubai hotels closed 2014 with strong occupancy and average room rates in December which saw overall performance levels exceed those achieved in 2013. This increase was driven by a 2.0% increase in ARR, however the market witnessed a marginal decline in occupancy by 0.2 percentage points to close the year at 80.0%. Although the market has been facing challenges with geopolitical issues in Eastern Europe and the revival of Egypt’s tourism industry, Dubai continues to steam ahead in attracting an increasing number of visitors as seen with Dubai International Airport toppling London Heathrow for the top spot in international passenger traffic with 70.4 million passengers passing through the airport in 2014”, commented Christopher Hewett, Senior Consultant at TRI Consulting in Dubai.
2014 ‘the year of rebound’ for Abu Dhabi hotels
Abu Dhabi hotels recorded an impressive 10.1 percentage point increase in occupancy levels reaching 83.1% in December, driving a 22.8% growth in RevPAR to US$141.55. The strong demand levels allowed hoteliers to command healthier ARR, which grew by 7.9% to US$170.37. The growth in rooms revenue was offset by a reduction in food and beverage revenues which fell by 4.4% and 2.4% respectively during the month; however, TRevPAR performance remained strong, up by 15.8% to US$301.25.
‘‘The Abu Dhabi hotel market achieved strong performance levels across the board in 2014, as hotels benefitted from a 4.6 percentage point rise in occupancy levels on the back of increased tourist numbers. After facing years of oversupply, average rates rebounded during the year with the market breaching threshold required to see average rates increase by 0.8% over 2013. The rise in demand, which was particularly prevalent during the second half of the year, was boosted by the continued promotional campaigns undertaken by the Abu Dhabi Tourism and Culture Authority. The capital was able to capture increased leisure demand during peak season due to its dynamic entertainment offering which was enhanced by the opening of the Yas Mall” commented Hewett.
Doha hotels witness double-digit growth in TRevPAR
Hotels in Doha continued to see rooms revenue rise for the eighth consecutive month in December with occupancy levels increasing by 11.2 percentage points to 71.5% while ARR grew by 4.9% to US$232.08. The rise in both indicators led to a RevPAR surge of 24.4% to US$165.99. The strong demand also benefitted other profit centres, as the F&B and leisure departments enjoyed an upsurge in revenues which corresponded to a 22.8% rise in TRevPAR to US$397.62. The reduction in payroll expenses and operational expenses helped to drive a 23.0% growth in the bottom-line profits as GOPPAR reached US$158.26.
‘‘Hotels in Doha demonstrated a commendable recovery in 2014, as double-digit growth in occupancies moderated the marginal decline in rates and drove RevPAR up by 16.1% to US$160.15. As the supply and demand dynamics began to stabilise from the influx of rooms that came online during the previous years, the market made way for an occupancy growth of 11.0%. The four and five star hotels in Doha also continued to benefit from dining and conferencing revenues which helped drive bottom-line profits up by 25.5%.” commented Hewett.
Beirut hotels report a 4.5% growth in profit margins in 2014
The Beirut hotel market reported a significant increase in performance levels during December with a 6.2% increase in ARR to US$142.13, coupled with occupancy levels rising by 9.8 percentage point to 61.7%. The growth in both overall demand and room yields boosted RevPAR by 26.2% to US$87.63. Top-line revenues were heavily driven by the growth in rooms revenue as food and beverage revenues declined during the month by 4.2%. As a result, TRevPAR grew by 10.8% to US$169.46, lifting GOPPAR levels by 35.2% to US$40.73.
“Hotels in Beirut posted a strong recovery in performance levels during the latter part of 2014, largely due to the improved average rates. A 2.1% growth in ARR during 2014 mitigated a marginal decline in occupancy of 0.8 percentage points, allowing RevPAR to post a marginal growth of 0.5%. However, TRevPAR was impacted by lower dining activity coupled with decreased revenues derived from minor operated departments. Despite the reduction in total revenues, hoteliers implemented effective cost cutting measures to improve operational efficiencies which helped profits grow by 4.5% during the year”, commented Hewett.
Manama hotels are buoyed by higher leisure demand in 2014
Hotel demand in Manama continued to recover, as hotels reported a 4.1 percentage point rise in occupancy to 46.1% in December. The growth in demand pushed RevPAR up by 5.0% to US$86.78, despite the impact of ARR falling by 4.2% to US$188.17 during the month. Hoteliers dropped rates across corporate, conference and leisure segments in order to raise occupancies during December, which generally witnessed low demand due to cooler weather. However, revenue from non-rooms operations saw improvements, particularly within the F&B department which increased by 4.1% of the total revenue and lifted TRevPAR to US$165.75, up by 11.3% from the previous year. A 3.7 percentage point reduction in payroll expenses boosted bottom-line profits as GOPPAR grew by 25.5% to US$53.10.
“Four and five star hotels in Manama witnessed a gradual improvement in performance during 2014 as occupancy levels started to recover from the beginning of the year due to greater political stability. Rooms revenue grew on the back of occupancy rising by 5.6 percentage points, while ARR remained subdued at US$192.52, down by 0.8% from 2013. Hotels benefitted from higher leisure demand emanating from the Eastern Provinces of Saudi Arabia, as reflected in the volume of growth within the leisure segment” commented Hewett.
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 percentageof total revenue.
GOPPAR is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
TRI Consulting provides a wide range of services to clients in the hotel sector. For more information visit http://www.trimideast.com/
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