Market Reports

MENA Chain Hotels Market Review - October 2019

For the second consecutive month, hotels in the Middle East & North Africa recorded a year-over-year rise in profit, a positive sign for a region where GOPPAR declines had previously abounded. GOPPAR in October increased 4% over the same month last year, according to data from HotStats. The increase comes on the heels of a strong September, which saw 10.9% YOY growth in the metric.
Unkown Middle Eastern destination
Profit Streak Continues at MENA Hotels

HotStats

For the second consecutive month, hotels in the Middle East & North Africa recorded a year-over-year rise in profit, a positive sign for a region where GOPPAR declines had previously abounded. GOPPAR in October increased 4% over the same month last year, according to data from HotStats. The increase comes on the heels of a strong September, which saw 10.9% YOY growth in the metric.

Still, the 12-month-moving average GOPPAR remains a negative 5.4%.

The jump in October profit came despite a revenue squeeze. Year-over-year RevPAR was up slightly at 0.5%, dragged down by a 4.2% YOY decrease in average room rate. The narrow RevPAR gain was underpinned by a 3.5-percentage-point increase in occupancy.

The slight jump in RevPAR resulted in a similar small increase in total revenue, which was up 0.8% YOY and aided by a 2.5% YOY jump in F&B revenue.

On the expense side, total overhead costs on a per-available-room basis were up 0.2% YOY in the month. While Admin & General and Sales & Marketing costs were up YOY, 5.4% and 7.6%, respectively, Property & Maintenance costs came down 2.5%. In addition, total hotel labour costs on a PAR basis were down 1.9% YOY and down 0.7 percentage points as a percentage of total revenue. 

As a result, profit margin was up 1.2 percentage points to 38.7%, the highest point of the metric since April 2019.

Profit & Loss Performance Indicators – Middle East & North Africa (in USD)

KPI October 2019 v. October 2018
RevPAR +0.5% to $118.76
TRevPAR +0.8% to $203.30
Payroll -1.9% to $53.99
GOPPAR +4.0% to $78.65

“The region continues to build off a solid previous month and while negative room rate growth continues to be a monthly trend, higher occupancies and blunted expense growth are helping drive both top-line and bottom-line gains,” said Michael Grove, Managing Director, EMEA, HotStats.

Jeddah saw exponential growth for the month across an array of metrics. RevPAR erupted in October, up 37.2% over the same period last year—the result of a 12.6-percentage-point jump in occupancy and a 7.6% increase in room rate.

Helping fuel the growth is the new King Abdul Aziz International Airport Terminal 1, one of the biggest infrastructure projects undertaken in the Kingdom, and with a long-term goal to handle more than 80 million passengers per year by 2035.

The growth across the Rooms department helped lead to a 23% YOY increase in TRevPAR. And as revenue gained, some costs came down, including labour, which on a PAR basis was down 5.5% YOY. Propitious revenue gains pushed GOPPAR to an incendiary 105.3% YOY increase. Year-to-date, profit remains down 13.9%.

Profit margin for the month was up 10.9 percentage points to 27.1%.

Profit & Loss Performance Indicators – Jeddah (in USD)

KPI October 2019 v. October 2018
RevPAR +37.2% to $140.67
TRevPAR +23.0% to $213.55
Payroll -5.5% to $76.90
GOPPAR +105.3% to $57.78

Doha had similar positive results, as both RevPAR and TRevPAR shot up, 22.3% and 19.4%, respectively, the latter helped by a 18.9% YOY jump in F&B revenue on a PAR basis.

Qatar’s new willingness to sever ties with the Muslim Brotherhood, which is classified by Gulf countries as a terrorist group, could be the boost it needs to increase overall tourism and demand. Back in 2017, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Qatar, but reports are that Qatari’s Foreign Minister visited Saudi Arabia in October in an effort to end the two-year dispute.

Meanwhile, Marriott International's The Luxury Collection announced the opening of the brand's first property in Doha—Al Messila, A Luxury Collection Resort & Spa.

A 2.5-percentage-point YOY decrease in total labour costs as a percentage of total revenue aided in a 42.2% YOY GOPPAR increase.

Profit & Loss Performance Indicators – Doha (in USD)

KPI October 2019 v. October 2018
RevPAR +22.3% to $133.84
TRevPAR +19.4% to $334.41
Payroll +8.0% to $80.12
GOPPAR +42.4 to $134.32

About HotStats

HotStats provides a unique profit-and-loss benchmarking service to hoteliers from across the globe that enables monthly comparison of hotels’ performance against competitors. It is distinguished by the fact that it maintains in excess of 500 key performance metrics covering 70 areas of hotel revenue, cost, profit and statistics, providing far deeper insight into the hotel operation than any other tool. The HotStats database totals millions of hotel rooms worldwide. For more information, visit www.hotstats.com. To request a demo of the HotStats platform, please click here.



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