Return to our Home page Search
Click here for the hotel and hospitality news from around the globe Hotel, Travel and Hospitality Articles Videos and in-depth Interviews
Read more now
Read more now
Read more now
Read more now
Read more now
MENA hotels market review: Profits in Abu Dhabi soared on the back of strong revenues.
Thursday, 5th June 2014
Source : TRI Hospitality Consulting Middle East
Hotels in Abu Dhabi maintained robust performance throughout the month of April, as occupancy saw the highest growth amongst the five cities observed in the MENA region, according to the latest data from HotStats.

Abu Dhabi attracted a high number of international leisure and MICE visitors that drove occupancy rates of four and five star hotels to 84.6% in April. The strong demand allowed hoteliers to increase yields with the market witnessing a 9.0 percent surge in Average Room Rates (ARR) to US$163.32, resulting in Revenue per Available Room (RevPAR) rising by an astounding 18.2% to US$138.22.

An increase in leisure and MICE demand in the city contributed to a substantial rise in conferencing, food and beverage revenues, as Total Revenue per Available Room (TRevPAR) grew by 14.3% to US$295.24. A slight reduction in payroll costs helped hotels register a 25.8% increase in Gross Operating Profits per Available Room (GOPPAR) to US$103.38.

 “Abu Dhabi’s strong hotel performance in April was driven by a consistent rise in visitor numbers that boosted demand for rooms and F&B activity. The capital continued to attract international visitors, with particular growth witnessed from Chinese guests due to the Nu Skin Success Trip that delivered 6,000 guests and 12,500 room nights during the month.

The incentive trip drove demand for top tourist attractions on Yas Island and benefitted Abu Dhabi’s hotels which witnessed a 25.8% uplift in profits” commented Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.

Hotels in Jeddah see uplift in all performance indicators

Hotels in Jeddah also 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 2.5 percentage points to 81.4%, rising on the back of strong demand.

Average room rates increased 9.3% closing the month at US$268.59 and boosting RevPAR by 12.7% to US$218.57. Increased revenues from food and beverage consumption, along with higher conferencing revenues led to a TRevPAR growth of 10.8%. Strong top-line revenues coupled with a 1.5 percentage point reduction in payroll costs boosted GOPPAR by 16.8% to US$174.13.

“April is traditionally a strong month for hotels in Jeddah, as it marks the start of high season that occurs during the summer months. The market witnessed particularly strong performance this year due to corporate demand arising from the delayed commencement of various infrastructure and rail projects. Additionally, the annual transition of the King’s court to Jeddah began six weeks earlier this year, during mid-April. Even though negotiated rates were contracted with members of the royal family and ministries, these guests illustrated a tendency to occupy prime rooms and suites. The demand for superior rooms had a positive impact on average rates which rose by 9.3% amongst four and five star hotels” commented Goddard.

Riyadh witnesses growth in TRevPAR from non-room revenues

Riyadh maintained steady demand levels on the back of strong corporate activity during April. Hotels reported occupancy growth of 5.4 percentage points to 73.0%, although the market experienced a 4.9% decline in average rates to US$251.07, leaving RevPAR 2.7% higher compared to the same month last year.

With food revenues comprising 34.3% of total revenues, the 5.0% growth witnessed in April drove a 14.3% increase in TRevPAR due to the strong contribution compared to other line items.

“Occupancy levels of hotels in Riyadh typically peak in April before subsiding during the summer months when corporate activity retreats. This year also witnessed strong demand from corporate and MICE segments, with events such as the Riyadh Travel Fair attracting 15,000-20,000 visitors according to preliminary figures. Despite strong demand and higher occupancies, room revenues were impacted by reduced average rates. Fortunately for the Riyadh market, a growth in food revenues driven by higher utilisation from visitors and local residents helped hotels grow GOPPAR by 15.4% to US$180.15 in April” commented Peter Goddard.

Hotel profitability in Sharm El Sheikh plummets following reduced visitor numbers

Sharm El Sheikh hotels struggled to remain afloat in April as average rates fell throughout the month and low demand exerted pressure on non-room revenues. Occupancy levels declined 8.0 percentage points reaching 62.5%, while ARR plummeted 13.3% to US$44.57 and reduced RevPAR by 23.2 percent to US$27.84.

A substantial decline in food and beverage activity which comprises approximately 37 percent of revenues in the resort destination caused TRevPAR to deteriorate by 22.2%. The 6.3 percentage point surge in payroll had a detrimental impact on the bottom line as GOPPAR plummeted by 42.7% to US$16.51 for the month.

“Ongoing unrest has heavily impacted Egypt’s travel industry with tourist numbers down 22% during the month of April. The drop was driven by a 20% decline in European source markets which comprise 80% of demand, much of which is traditionally oriented towards the affordable Red Sea resorts. Air Berlin suspended flights to Sharm El Sheikh until April 30th during a period that has typically attracted strong demand from spring holidaymakers. Hotels were further impacted by the cancellation of travel packages by German tour operators during the same period. With Germany being one of the two largest source markets for Egypt, lower visitor numbers substantially impacted revenues and reduced bottom line profits” commented Goddard.

Occupancies in Kuwait hotels decline due to lower corporate demand

Monthly performance indicators for Kuwait hotels showed a 10.0 percentage point decline in occupancy to 54.2% that was impacted by lower corporate demand. The 2.2% rise in ARR to US$282.52 was insufficient to negate the 13.8% decline in RevPAR.

The corporate segment declined 3.0 percentage points from the previous year to constitute 34.5% of the market and noticeably impacted revenues due to the segments’ contribution to demand. The reduction was also reflected in lower non-room revenues which caused TRevPAR to drop 13.0%. Further subdued by a 2.1 percentage point rise in payroll costs, profits fell 17.8% to US$159.67.

“Hotels in Kuwait suffered from a heavy reduction in corporate demand that could not be offset by higher average rates. Hoteliers have actively pursued government demand in order to cover the shortfall in the corporate segment which drove a decline in room revenues. Safeguarded by the minimum rate agreement, average rates have increased 10.0% during the first four months of the year and have helped to alleviate the impact of lower occupancies on the bottom line profits” commented Peter Goddard.
Visit Unplugged Collection
 Useful Links  (Click company to visit)
A-Listings - Exclusive Links Section @ 4Hoteliers

Content Marketing

Follow us on Twitter!

Hotel Tech Live 2017

Tourism Investment Projects - Franchise - Modular

 Latest News  (Click title to read article)

 Latest Articles  (Click title to read)

 Most Read Articles  (Click title to read)

~ Important Notice ~
Articles appearing on 4Hoteliers contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.

© Copyright 4Hoteliers 2001-2017 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here

Use of this web site is subject to our
terms & conditions of service and privacy policy