MENA Chain Hotels Market Review - November 2017
Despite successfully recording growth across a number of revenue departments this month, hotels in the Middle East and Africa suffered a 1.8% year-on-year drop in GOPPAR, which was primarily as a result of weakening achieved average room rate, according to the latest worldwide poll of full-service hotels from HotStats.
Whilst hotels in the Middle East & Africa effectively recorded a 2.3-percentage point increase in room occupancy in November, to 71.6%, which was the second highest occupancy recorded in the region in 2017, this was completely cancelled out by a 4.7% decline in achieved average room rate, to $188.53.
As a result, RevPAR for hotels in the Middle East & Africa fell by 1.4% to $135.08 in November. The challenges to average room rate in the region meant this was the fifth month of the year in which RevPAR has fallen, contributing to the 1.8% drop in this measure in the 11 months to November 2017, to $114.99.
In contrast to the decline in Rooms Revenue, hotels in the Middle East & Africa achieved growth in Non-Rooms Revenues, including Food & Beverage (+2.2%), which contributed to TrevPAR movement being reduced to a marginal -0.2% decline, to $232.53.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
November 2017 v November 2016
RevPAR: -1.4% to $135.08
TrevPAR: -0.2% to $232.53
Payroll: +0.9 pts to 24.5%
GOPPAR: -1.8% to $99.28
In addition to the drop in revenue, profit levels were further depleted by cost increases, which included a 0.9-percentage point uplift in Payroll, to 24.5% of total revenue. The rising costs contributed to the 1.8% decline in GOPPAR at hotels in the Middle East & Africa.
Despite the year-on-year decline, at $99.28 in November, profit per room at hotels in the Middle East & Africa was the second highest recorded in 2017 and the GOPPAR achieved at hotels in the region in November was equivalent to a profit conversion of a punchy 42.7% of total revenue. This was 35.5% above the year-to-date GOPPAR for the region, at $73.14.
“November is typically a strong month of performance for hotels in the Middle East & Africa and this month was almost entirely fuelled by North Africa and particularly ‘winter sun’ resorts, including Tunisia and Egypt.
In contrast, economic challenges borne out of the oil crisis continued to take their toll on performance levels at hotels in the Middle East. Even the biennial Dubai Air Show failed to make a material difference to performance for hotels in the UAE capital, despite a 20% increase in trade visitors to the show,” said Pablo Alonso, CEO of HotStats.
For hotels in Alexandria, November marked another positive month of top and bottom line growth for hotels in the Mediterranean city, which is leading the recovery of tourist destinations in Egypt in 2017.
Profit & Loss Key Performance Indicators – Alexandria (in USD)
November 2017 v November 2016
RevPAR: +18.1% to $45.05
TrevPAR: +16.6% to $66.55
Payroll: -2.0 pts to 18.0%
GOPPAR: +10.5% to $25.78
The 18.1% RevPAR increase at hotels in Alexandria was due to a 4.4-percentage point increase in room occupancy, to 68.4%, in addition to a 10.4% increase in achieved average room rate, to $65.82.
The growth this month contributed to the 66.2% increase in RevPAR for the 11 months to November 2017, to $49.35, an uplift of approximately $20 from the same period in 2016 ($29.70), albeit from a very low base.
Furthermore, hotels in Alexandria successfully recorded a 16.6% increase in TrevPAR in November, which was due to the growth in RevPAR, as well as increases in Non-Rooms Revenues, including a 12.9% increase in Food & Beverage Revenue, to $19.41 per available room.
The considerable growth in top line revenues meant that Payroll levels for hotels in Alexandria fell by 2.0 percentage points to a lowly 18.0% of total revenue this month, contributing to the 10.5% increase in GOPPAR to $25.78.
“The tourism industry in North Africa has been reeling from political uncertainty and terrorist attacks since 2011 and Alexandria in particular was the victim of a deadly attack on one of its churches, but its resorts are now starting to claw back their losses as confidence in Egypt as a tourism destination returns.
This will be welcome news for hotel owners and operators in the region which have seen performance levels plummet to record lows in recent years, but hopefully they are now back on the road to full recovery,” added Pablo.
Whilst the performance in Alexandria was representative of the positive performance for properties across North Africa, in stark contrast, hotels in Amman suffered declines in top and bottom line performance as the region wrestles with rate.
Despite hotels in Amman successfully recording a 0.1-percentage point increase in room occupancy in November, to 58.8%, this was more than cancelled out by a 6.0% decline in achieved average room rate, to $136.35 and as a result, RevPAR dropped by 5.9% to $80.13.
Profit & Loss Key Performance Indicators – Amman (in USD)
November 2017 v November 2016
RevPAR: -5.9% to $80.13
TrevPAR: -6.8% to $128.32
Payroll: +4.5 pts to 33.6%
GOPPAR: -16.3% to $33.38
In addition, hotels in Amman suffered declines in Non-Rooms Revenues, including Food & Beverage (-11.1%) and Conference & Banqueting (-12.9%), which contributed to the 6.8% drop in TrevPAR, to $128.32.
The decline in revenue levels was further exacerbated by rising costs, which included a 4.5-percentage point increase in Payroll, to 33.6% of total revenue. As a result, GOPPAR at hotels in Amman fell by 16.3% year-on-year to $33.38 for the month of November.
On a rolling 12-month basis, profit per room at hotels in Amman has almost halved since the oil crisis began, falling to $32.07 in the 12 months to November 2017, from $61.52 during the same period in 2013/14.
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