UAE hotels record strong performance in August

UAE hotels registered handsome increases in occupancy rates and revenues in the month of August, defying the traditional summer slump, according to the latest HotStats survey of full service hotels in seven MENA (Middle East and North Africa) cities by TRI Hospitality Consulting.

Hotels in Abu Dhabi posted a 31.3 per cent growth in revenues per available room (RevPAR) in August as demand was elevated by successful government-initiated tourism promotions, TRI said in a media statement.

Average occupancy at four- and five-star chain hotels in the UAE’s capital city reached 63.1 per cent, growing by 12.4 percentage points, while Average Room Rates (ARR) increased to $112.12, up by 5.5 per cent compared to the same period last year.

As a result, RevPAR for the month increased by 31.3 per cent to $70.74 while Total Revenue Per Available Room (TRevPAR) increased by 24.2 per cent to $159. However, the effect of a 7.7 percentage point rise in payroll costs drove Gross Operating Profit Per Available Room (GOPPAR) up from the previous year to $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” said 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 per cent rise in ARR to $228.99 coupled with an 8.5 percentage points rise in occupancy to 71.3 per cent drove RevPAR up by 26.4 per cent to $163.35 during the month. A 20.1 per cent growth in TrevPAR drove a 98.3 per cent increase in GOPPAR to $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 per cent. 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,” said 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 per cent while ARR grew 12 per cent to $271.72, causing a 23.3 per cent increase in RevPAR during the month.

Despite low occupancy levels, average rates for the month of August exceeded year-to-date levels of $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 per cent to $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 per cent, driving RevPAR 44.7 per cent lower to $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 per cent to $119.62. The plummet in TrevPAR and increase in operating profits corresponded to GOPPAR declining 96.9 per cent to $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 per cent to $52.66.

However, occupancy was 12.7 percentage points lower compared to the same period last year and caused RevPAR to decline 7.2 per cent to $30.10. The 9.6 per cent reduction in TRevPAR, coupled with an increase in operating expenses resulted in GOPPAR levels declining 28.2 per cent to $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,” said Goddard.

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 per cent to $273.54 during the month, a 10.1 percentage point drop in occupancy to 69 per cent dragged the RevPAR down by 7.3 per cent to $188.85. The decline in top line revenues coupled with the 7 per cent retraction in TRevPAR resulted in GOPPAR falling 12.8 per cent to $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 per cent and average rates grew 4.6 per cent to $226.02 driving RevPAR upwards by 9.9 per cent to $72.30. Nonetheless, low operating profits and higher payroll costs resulted in a fall in GOPPAR to $37.93.

“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,” Goddard said.
 

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