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29 March 2024

School break spells good news for Dubai and Abu Dhabi hotels

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By Staff

Hotels in Abu Dhabi and Dubai capitalised on a surge in GCC demand in March driven by the spring break for schools in the region, which was complemented by an array of cultural, sports and other events, according to the latest HotStats survey of full-service four- and five-star hotels by TRI Hospitality Consulting.

Occupancy levels in Abu Dhabi surged 19.3 percentage points to 81.7 per cent, while average room rate (ARR) dropped 5.1 per cent to Dh584 ($158.99) compared with the same period last year, lifting revenues per available room (RevPAR) up by 24.3 per cent to Dh477 ($129.91).

The demand spike was driven in part by a surge in arrivals from neighbouring countries due to the spring break for schools, which was complemented by an array of cultural and sports events, as well as trade fairs and exhibitions, the TRI report said.

Consequently, hotels in Abu Dhabi reported the highest growth in revenues and profits amongst the GCC cities surveyed by HotStats as total revenue per available room (TRevPAR) went up 24.6 per cent to Dh1,054 ($286.97) and gross operating profit per available room (GOPPAR) increased 37.6 per cent to Dh373 ($101.51).

“Abu Dhabi is in the process of building itself as a year-round destination, it is already gaining popularity as a family-oriented holiday destination offering a variety of activities and facilities, appealing to the wider GCC travellers,” said Peter Goddard, Managing Director of TRI Hospitality Consulting in Dubai.

“The correction in the room rates may also have assisted in the recent recovery in occupancy levels, improving its competitiveness against Dubai and other GCC destinations. In the long term, we are optimistic that the leisure projects in pipeline in Abu Dhabi will help boost regional and international leisure tourism which is likely to boost rates and average length of stay for hotels in Abu Dhabi,” he added.

Dubai hotels continued to report stellar performance, highlighted by double digit growth in RevPAR and GOPPAR. Occupancy in Dubai stood at stunning 89.8 per cent, up 2.3 percentage points against March last year, and ARR increased 9 per cent to Dh1,461 ($397.65), lifting RevPAR by 11.8 per cent to Dh1,311 ($356.98). An 11.5 per cent growth in TRevPAR to Dh2,181 ($593.67), marginal improvements in costs and overheads resulted in a 16.6 per cent growth in bottom line with a GOPPAR of Dh1,219 ($332.01), the highest profit registered during the month across the surveyed cities.

“2012/13 has been one of the strongest tourist seasons in Dubai’s history. Tourism arrivals from all regions have shown significant growth as the city’s leaders have ensured that both capacity and connectivity matched the growing tourism demand and visitor requirements,” said Goddard.

“Dubai is now home to the world’s second busiest airport, further proving Dubai’s position as a primary destination as well as a major international transit hub. Specifically in March, most of the prominent leisure destinations in the GCC including Dubai seem to have benefited strongly from the school holidays,” he added.

In Kuwait, hotel performance deteriorated as the ARR dropped 6.8 per cent to $259.22 and occupancy remained stagnant at 65.3 per cent, resulting in a 6.8 per cent drop in RevPAR to $169.32. Its impact on gross revenues was relatively limited as TRevPAR dropped 1.8 per cent to $375.11, however an increase in payroll and overheads and a 29.4 per cent fall in meeting room revenues stunted the bottom line, dragging GOPPAR down by 10.7 per cent to $179.49.

Cairo hotels suffer as protesters return, however performance surge in Sharm El Sheikh

Hotel revenues were up by a third and profits jumped 80.5 per cent in Sharm El Sheikh in March despite the troubles experienced in Cairo which affected hotel performance in the capital, according to the latest HotStats survey of full-service four- and five-star hotels by TRI Hospitality Consulting.

In March, Cairo bore witness to resurgence in protests and increased political tension. As a direct consequence, occupancy in Cairo hotels dropped 6.8 percentage points to 42 per cent as business demand plummeted, while ARR improved 11.4 per cent to $112.86. The lower occupancy caused a 4.1 per cent decline in RevPAR to $47.37 which, coupled with the knock-on effect on meeting room and other revenues, contributed to a 7.4 per cent reduction in TRevPAR to $87.86. On the bottom line, this resulted in a 17.3 per cent decline in GOPPAR to $37.19.

Despite the troubles in the capital, hotels in Sharm El Sheikh reported brisk business in March and showed significant growth in performance levels compared to last year. The city was not directly impacted by the events in Cairo and the tour operator-driven business, which represent the main source of demand and are typically booked well in advance, tends to show limited reaction to less significant events.

Occupancy in Sharm El Sheikh was up 5.4 percentage points against the same period last year to 59.4 per cent and ARR was up 29.1 per cent to $48.11, resulting in a 42.2 per cent growth in RevPAR to $28.56. TRevPAR was higher than last year by 33.4 per cent at $54.38 which, coupled with a 11.8 per cent decrease in overheads, boosted GOPPAR by 80.5 per cent to $22.06.

Nevertheless, GOPPAR in Sharm el Sheikh remains the lowest amongst the cities surveyed by HotStats as demand is primarily driven by heavily discounted segments such as tour groups and charters which puts heavy strain on rates and profit margins.

“The political events in Cairo are putting heavy pressure on all businesses including hotels. The events in March has disrupted the recent recovery experienced by hotels as both leisure and corporate demand took a hit in the light of street protests and reports of kidnapping. Hotels in Sharm El Sheikh, however, appear to be well on course to a solid year if security issues do not resurface here,” said Goddard.

In Saudi Arabia, occupancy in Jeddah declined 2.7 percentage points to 78.5 per cent; however, a 10.8 per cent growth in ARR to $244.42 lifted RevPAR up by 7.2 per cent to $191.8. The surge in leisure demand driven by the spring break for schools as well as the various conferences held in the city throughout the month such as the Big 5, the Mares Conference and the Jeddah Economic Forum helped maintain demand levels through the month. Jeddah hotels reported a 1.7 per cent growth in TRevPAR to $295.98, and a marginal growth in GOPPAR to $142.95.

Hotels in Riyadh saw somewhat stable occupancy in March at 70.4 per cent; however, a 3.8 per cent decline in ARR to $242.53 resulted in a 2.5 per cent reduction in RevPAR down to $170.45. The downward trend appears to be driven by a decline in corporate demand. TRevPAR was down marginally to $274.37 and profit in terms of GOPPAR declined 2 per cent to $154.88.