MENA Chain Hotels Market Review - June 2017
Whilst hotels in the Middle East & Africa achieved an overall increase of 2.9% in GOPPAR, the month was notable for the major disparity in performance across the region as a result of Ramadan and the subsequent Eid al-Fitr celebrations, according to the latest worldwide poll of full-service hotels from HotStats.
Despite the Middle East & Africa region performing ahead of the same period last year, with year-on-year increases in both top and bottom line metrics, the observing of Ramadan for almost the entire month of June meant that performance levels were some of the lowest recorded in the last 12 months.
This is no better exemplified than in room occupancy, which plummeted to 47.9% in June, which is well below the rolling average of 63.6% recorded in the 12-months to June 2017. Very low occupancies were recorded in a range of markets across the region, including Abu Dhabi (51.0%), Doha (42.1%) and Kuwait (35.5%).
As a result of the reduced volume, hoteliers struggled to drive room rates, as well as non-rooms revenue levels, and regional TrevPAR fell to just $163.60, against a rolling 12-month average of $205.88.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
June 2017 v June 2016
RevPAR: +3.5% to $88.84
TrevPAR: +1.7% to $163.60
Payroll: +0.8 pts to 33.5%
GOPPAR: +2.9% to $44.55
Hotels in the Middle East & Africa region recorded a 2.9% increase in GOPPAR in June, which was in spite of a 0.8 percentage point increase in Payroll, to 33.5% of total revenue. However, profit per room this month was 44.7% below the average for the 12-months to June 2017, at $80.68.
“The 30 days of Ramadan ran from late May to late June this year and severely impacted trading in some major markets this month. In addition to impacting commercial demand levels, the Muslim holy month also hit leisure demand, as inbound visitors are reluctant to travel to destinations observing Ramadan as there is doubt about what will actually be open,” said Pablo Alonso, CEO of HotStats.
For hotels in Abu Dhabi, RevPAR plummeted to a monthly five-year low of just $49.96 in June, 48.7% below the average for the 12-months to June 2017, at $97.35.
Despite hotels in the UAE capital converting an 8.1% decline in TrevPAR into a 16.6% increase in GOPPAR, as shrewd hoteliers slashed costs, a loss of -$5.09 was recorded at Abu Dhabi hotels this month.
Profit & Loss Key Performance Indicators – Abu Dhabi (in USD)
June 2017 v June 2016
RevPAR: -0.7% to $49.96
TrevPAR: -8.1% to $109.61
Payroll: +0.1 pts to 49.7%
GOPPAR: +16.6% to -$5.09
The month of June has punctuated a challenging six months for hotels in Abu Dhabi, with year-to-date declines recorded across key metrics, including GOPPAR (-13.8%), to $51.71. As a result, profit conversion has fallen to just 28.1% of total revenue in the six months to June 2017.
In contrast, headline performance levels at hotels in Sharm El Sheikh increased by significant margins as the Red Sea resort benefited from a surge in tourism, including both Arab and domestic visitors, during the post-Ramadan Eid al-Fitr holidays, albeit from an extremely low base.
The 324.1% year-on-year growth in RevPAR for the month was led by a 13.8 percentage point increase in room occupancy, to 30.1%. The uplift in volume also enabled growth in non-rooms revenue to be achieved, including Food and Beverage (+175.3%), which contributed to the 239.3% increase in TrevPAR.
“Arguably, some hotels in the Middle East would be better off closing their doors for the month of June to save the losses. For others, being a destination for Eid al-Fitr celebrations, which mark the end of Ramadan, presents a fantastic opportunity to drive top and bottom line performance,” added Pablo.
Despite the margins of growth, revenue levels at hotels in Sharm El Sheikh were not sufficient to outweigh the high cost base and hotels in the Red Sea resort recorded a $1.50 per available room loss for the month of June.
Profit & Loss Key Performance Indicators – Sharm El Sheikh (in USD)
June 2017 v June 2016
RevPAR: +324.1% to $12.13
TrevPAR: +239.3% to $20.22
Payroll: -48.7 pts to 40.3%
GOPPAR: +77.1% to -$1.50
The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate in the full-service sector.
Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.
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