Dubai hotel profits up

Profits of hotels in Dubai and room rates increased in September thanks to an array of events hosted throughout the month.

Hotels in Dubai showed strong profitability throughout the month of September this year, although the market witnessed a 2.8 percentage point decrease in occupancy, according to the latest HotStats survey of full service hotels in seven MENA cities by TRI Hospitality Consulting.

Average Room Rates (ARR) in the city increased by 3.9 per cent to $218.30, while total revenue per available room (TRevPAR) grew 2.7 per cent to $311.59. The city hosted an array of events throughout the month of September allowing hoteliers to yield higher rates, thereby boosting gross operating profit per average room (GOPPAR) 11.3 per cent to $93.66.

“Dubai plays host to a miscellany of events throughout the month of September, namely Index and Gitex exhibitions which helped maintain healthy demand levels after Eid Al Fitr. As the leisure segment continues to represent the largest demand in the city, the forecasted influx of leisure travellers over the next few months is likely to boost key performance indicators until the end of the year. On the other hand, hotels in Abu Dhabi continue to register weak performance mostly due to the city’s heavy reliance on corporate demand which remained subdued throughout September,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Abu Dhabi’s hotel market appeared stagnated as performance indicators declined significantly in comparison with September of last year with ARR decreasing 10.6 per cent to $124.28, and occupancies dropping 0.2 percentage points to 65.5 per cent.

Revenue per average room (RevPAR) decreased 10.9 per cent to $81.37, and TRevPAR dropped 7.7 per cent to $188.93. The continued pressure on average rates coupled with a proliferation of competition depleted GOPPAR by 18.2 per cent to $56.78, the lowest registered profit in the GCC for the month.

Saudi Arabia

September also saw demand distribution normalise between the two surveyed markets in Saudi Arabia. Riyadh based hotels showed a strong come back as indicators bounced back from the slump seen during the summer months. When compared to the same period last year, occupancy rates in Riyadh show an increase of 4.1 percentage points reaching 60.5 per cent while ARR increased 1.6 per cent to $250.60, among the highest in the region.  Food and beverage revenues increased significantly suggesting an increase in events previously paused in accordance with the holy month of Ramadan. This upsurge in festivities accounted for a 10.5 per cent rise in TRevPAR as well as a 10.1 per cent increase in profits to $131.4.

Similarly, hotel performance in Jeddah showed no signs of slowing as occupancies rose 6.2 percentage points to 81.5 per cent in addition to a 3.9 per cent increase in ARR to $222.29. A rise in corporate demand owing to the return of business activity justified the 12.6 per cent increase in RevPAR to $181.24 which, coupled with an increase in food and beverage revenues, drove a growth in TRevPAR of 10.1 per cent to $278.90 leading to an 11.8 per cent increase in GOPPAR to $123.03.

“The steep increase in Riyadh’s performance is symptomatic of post-summer lulls, as businesses get back on track and corporate demand is spurred. Festivities and events halted during the holy month resumed, accounting for a large increase in food and beverage revenues which drove an increase in the bottom line,” added Goddard.

Egypt

Hotel performance in Egypt continues to show on-going signs of recovery. Occupancy rates in Cairo grew to 55.4 per cent, while RevPAR and TRevPAR stood at $63.63 and $125.96 respectively.  Demand in Cairo has long been divided proportionately between corporate travellers and leisure seekers, both of whom have restored their confidence in the destination allowing for GOPPAR to grow 19.2 per cent to $63.79. Sharm el Sheikh also boasted increases in performance indicators as occupancy grew 5.3 percentage points to 74.5 per cent and RevPAR increased 5.1 per cent to $32.10. Profits in the popular destination remained subdued at $20.61, mostly due to reduced rates granted to travel agents and inbound tour groups.

“Our data for September shows a steadily recovering Egyptian market with hotels in Cairo registering their highest profits in a year. Sharm el Sheikh is well on its way to recovery, in spite of travel agent fees that continue to diminish profit margins. With the city’s high season approaching we anticipate continued growth for the remainder of 2012 and early 2013,” said Goddard.

Kuwait

The hotel market in Kuwait witnessed a notable growth in overall performance as occupancies increased 10.3 percentage points to 60.4 per cent, a change accredited to a post-summer increase in corporate demand in the city. ARR varied slightly from the same period last year decreasing 1.8 per cent but remained the highest in the region monitored at $255.29 predominantly due to the rate agreement. TRevPAR in the city increased 15.2 per cent to $300.07 as corporate demand grew allowing for hotels to post the highest profitability rates in the region for September at $137.84, outperforming all other markets surveyed.

“Kuwait experienced a growth in demand in September due to increase in business activity after the summer period. The hotel market continues to benefit from the rate agreement which maintains ARR at the top of the region. Although demand has re-bounded the on-going political troubles in the country could impact future demand as government backed projects remain subdued due to the absence of political stability” said Goddard.

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