UAE hotels profits surge 31%

Dubai hotels posted a 30.9 per cent increase in their gross operating profits per available room in May 2013, compared with the same month previous year, while a 14.7 percentage point surge in occupancy boosted Abu Dhabi hotels’ profits by 31.6 per cent in the same period, according to the latest HotStats survey of full-service four- and five-star hotels by TRI Hospitality Consulting Middle East.

Dubai’s hotel industry reaped visible benefits from the many international events that took place during the month of May, TRI says in its report.

“Both Abu Dhabi and Dubai have demonstrated strong growth in bottom line performance during May. Dubai exhibited particular strength in its key performance indicators, enhanced by the hosting of high-profile international events and growth in leisure demand,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Approximately 40,000 visitors attended the International Design Exhibition and Arabian Travel Market, TRI reckons, adding that while events such as Africa Global Business Forum and Dubai Airport Show attracted an audience of 10,000, they possessed high economic and commercial relevance nonetheless.

Revenue per available room in Dubai was boosted by a 6.6 percentage point growth in occupancy to 83.9 per cent and 8.5 per cent growth in average room rates $282.72 (Dh1,038). Consequently, the total revenue per available room for the surveyed Dubai hotels grew 14.9 per cent to $439.51 (Dh1,614), boosting gross operating profit per room by 30.9 per cent to $192.73 (Dh708).

Hotels in Abu Dhabi saw continuing decline in average room rates, which fell 8.3 per cent to $124.68 (Dh458) in May, however, revenue per room grew 15.1 per cent per cent, driven by an impressive 14.7 percentage point surge in occupancy to 72.1 per cent, according to the HotStats survey.

Supported by the growth in room revenue, total revenue per room for Abu Dhabi hotels increased 12.2 per cent, driving operating profits per room up by 31.6 per cent on last year to $61.37 (Dh225).

“In Abu Dhabi, RevPAR [revenue per available room] levels have seen some improvements over the last few months driven by strong growth in occupancy levels which have now returned to the pre-crash levels, however declining average rates continue to plague the city’s hotels,” said Goddard.

Kuwait

In Kuwait, May and June are considered peak seasons for weddings and events, with typically boost revenues for hotels. Although average rates declined 1.7 per cent to $254.86 (Dh936), the 2.6 percentage point growth in occupancy to 57.2 per cent helped revenues per room increase by 3.1 per cent to $145.65 (Dh535).

However, a substantial growth in dining and banqueting activities from increased wedding demand drove food and beverage revenues and increased total revenue per room by 13.5 per cent to $343.02 (Dh1,260). Consequently, gross operating profit per room for May stood at $150.38 (Dh552), up 8.6 per cent over the previous year.

Saudi Arabia

Jeddah hotels continued to demonstrate impressive performance levels in May with occupancy growing 1.3 percentage points to 84.3 per cent, the highest occupancy out of the seven Mena markets surveyed. Average rates increased 17.8 per cent to $259.34, driving a 19.7 and 25.2 per cent growth in revenue per room and operating profits per room to $218.61 and $178.46, respectively.

The continued influx of supply into the Riyadh hotel market appears to be slowly eroding the average rate performance within the city with the market witnessing a 2.7 per cent decline in average room rates in May to $241.52. The city experienced a marginal growth in occupancy which was up 0.2 per cent to 67.9 cent. However, it was not enough to prevent a 2.4 per cent decline in revenues per room to $163.92. The reduction in top line revenues filtered through to bottom line performance as operating profits per room fell 3.1 per cent on last year, despite a small reduction in payroll expenses.

“As Saudi Arabia’s premier commercial and leisure destination, Jeddah is experiencing high demand from domestic tourists as it enters the summer months resulting in the highest occupancy levels throughout the region. The continued growth in demand coupled with ever increasing average rates have resulted in an impressive 25 per cent growth in bottom line performance. On the contrary, Riyadh is entering the summer period which is typically characterised by softening performance levels. However this year will be even more challenging as the seasonality of demand is compounded by the increase in new supply,” said Goddard. 

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