Whilst hotels in the Middle East and Africa successfully recorded a close to 2% year-on-year increase in GOPPAR this month, the periods of decline recorded across 2017 threaten to undermine the positive months of performance. 

This month, a 3.1% decline in achieved average room rate, to $178.09, was more than offset by a 4.8-percentage point increase in room occupancy, to 68.5%, which underpinned the 4.1% increase in RevPAR, to $121.96.

In addition to the growth in Rooms Revenue, hotels in the Middle East & Africa recorded increases in non-rooms revenues this month, including Food and Beverage (+1.4%) and Conference and Banqueting (+1.2%), which contributed to the 2.7% increase in TrevPAR, to $208.13.

However, challenges remain in the economy of the Middle East & Africa, particularly in the oil exporting countries, which has impacted trading performance in the medium-term. This is not only illustrated in the achieved average room rate in the region, which has fallen by more than $22 over the last 36 months, but in revenue from other departments, which have dropped by approximately 16% during the same period, to $86.17 in the 12 months to October 2017.

Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
October 2017 v October 2016

• RevPAR: +4.1% to $121.96
• TrevPAR: +2.7% to $208.13
• Payroll: +0.4 pts to 25.9%
• GOPPAR: +1.9% to $81.42

Despite a 0.4-percentage point increase in Payroll, to 25.9% of total revenue, hotels in Middle East & Africa achieved a GOPPAR increase of 1.9% to €81.42 in October. This is equivalent to a profit conversion of 39.1% of total revenue.

In spite of this month’s increase, year-to-date GOPPAR levels at hotels in the region remain 5.9% behind the same period in 2016, at $70.51. And, at $74.77 in the 12 months to October 2017, profit per room has dropped by almost 30% in the last 36 months.
“The rollercoaster performance of hotels in the Middle East & Africa continued in October. Although hotels in the region have successfully recorded six months of year-on-year profit per room growth in 2017, the remaining five months have seen GOPPAR levels declining at a more rapid rate. As a result, it is hard to see hotels in the region recording a positive outcome for the year,” said Pablo Alonso, CEO of HotStats.

Hotels in Beirut seem less impacted by the issues facing the rest of the region, with a growing economy, led by an elevated tourism proposition driving a strong month of trading.

Profit & Loss Key Performance Indicators – Beirut (in USD)
October 2017 v October 2016

• RevPAR: +20.7% to $80.67
• TrevPAR: +17.7% to $112.71
• Payroll: -4.8 pts to 36.3%
• GOPPAR: +70.9% to $26.20

For hotels in Beirut, a 20.7% year-on-year increase in RevPAR was driven by an 8.6-percentage point increase in room occupancy, to 69.5%, in addition to a 5.7% increase in achieved average room rate, to $116.00.

This month, the achieved rate at hotels in Beirut was driven by a 28.7% year-on-year increase in rate in the leisure segment, to $146.18 in October, contributing to the year-to-date increase of 9.9% to $136.59. This is well ahead of the achieved rate in the corporate ($89.28) and residential conference ($64.46) segments, illustrating the strength of tourism to the city.

In addition to the growth in Rooms Revenue, an 11.0% increase in Other Revenues helped hotels in Beirut record a 17.7% increase in TrevPAR, to $112.71.

The considerable growth in top line revenues meant that Payroll levels for hotels in Beirut fell by 4.8 percentage points to 36.3% of total revenue this month, contributing to the 70.9% increase in GOPPAR to $26.20, albeit from a very low base of just $15.33 during the same period in 2016.

Whilst this was a very positive month of performance for hotels in Beirut, there is still room for improvement, with GOPPAR conversion recorded at just 23.2% of total revenue.

“The Lebanon economy is driven by the service sector and tourism in particular. In the first five months of the year, the number of tourist arrivals increased by 12.8% year-on-year. And with the recent election of President Aoun and subsequent formation of a unity government, this should mark the beginning of a period of stability for Lebanon, which will be positive for its hotels,” added Pablo.

In contrast to the positive performance of hotels in Beirut in October, properties in Manama had a month of mixed results.
Whilst hotels in the capital of Bahrain successfully recorded a 1.3-percentage point increase in room occupancy, to 51.6%, this was not sufficient to offset a 3.8% drop in achieved average room rate, to $162.28, and RevPAR fell by 1.3% this month, to $83.76.

Profit & Loss Key Performance Indicators – Manama (in USD)
October 2017 v October 2016

• RevPAR: -1.3% to $83.76
• TrevPAR: -3.1% to $136.21
• Payroll: -0.4 pts to 34.8%
• GOPPAR: +4.0% to $33.07

Further declines were recorded in non-rooms revenues, including Food and Beverage (-5.1%), which contributed to the 3.1% drop in TrevPAR, to $136.21.

However, the drop in revenue was overturned with cost cutting, which included a 0.4 percentage point saving in Payroll, to 34.8% of total revenue, enabling hotels in Manama to record a 4.0% increase in profit per room, to $33.07.

Despite the efforts of hoteliers in Manama this month, GOPPAR for year-to-date 2017 fell by 7.7%, to $42.52.