MENA Chain Hotels Market Review - December 2017
An uplift in room occupancy levels helped drive growth in revenue and profit for hotels in the Middle East and Africa this month, and marked a positive end to a year of mixed results for the region, according to the latest worldwide poll of full-service hotels from HotStats.
Although hotels in the Middle East & Africa suffered a 2.9% drop in achieved average room rate in December, to $189.18, a 3.1-percentage point increase in room occupancy, to 66.6%, helped drive a 1.8% increase in RevPAR, to $125.94.
Whilst an increase in volume was achieved across most segments, it was at the expense of a decline in achieved average room rate in the Residential Conference (-4.6%), Individual Leisure (-8.2%) and Group Leisure (-9.2%) sector rates.
The uplift in volume contributed to an increase in Non-Rooms Revenues, including Food & Beverage (+5.0%) and Conference & Banqueting (+4.1%), which supported a 2.3% increase in TrevPAR in December, to $225.14.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
December 2017 v December 2016
RevPAR: +1.8% to $125.94
TrevPAR: +2.3% to $225.14
Payroll: -0.7 pts to 23.3%
GOPPAR: +3.5% to $95.63
In addition to the growth in TrevPAR, profit levels at hotels in the Middle East & Africa were further boosted by a 0.7-percentage point saving in Payroll, which fell to 23.3%.
As a result of the movement in revenue and costs, GOPPAR at hotels in the region increased by 3.5% in December, to $95.63, which was equivalent to a profit conversion of 42.5% of total revenue.
“The diversity of hotel markets across the Middle East & Africa and their key demand drivers means it always going to be a mixed bag of top and bottom line performance, but this year has been particularly volatile due to the ongoing oil crisis, political and economic instability and security concerns.
It is therefore pleasing to report such a positive month of trading for hotels in the region at the end of 2017 and we look forward to profit performance recovering further in 2018,” said Pablo Alonso, CEO of HotStats.
Amongst the strong performing hotel markets this month was Abu Dhabi, which bucked its own 2017 trend of falling revenue and profit levels, to record a 15.9% increase in GOPPAR.
The growth in revenue was led by a 9.0% increase in RevPAR, to $117.33, as hotels in Abu Dhabi successfully recorded an increase in both room occupancy (+3.6 percentage points) and achieved average room rate (+4.0%).
Profit & Loss Key Performance Indicators – Abu Dhabi (in USD)
December 2017 v December 2016
RevPAR: +9.0% to $117.33
TrevPAR: +4.8% to $220.18
Payroll: -2.2 pts to 26.6%
GOPPAR: +15.9% to $78.66
For hotels in Abu Dhabi, the growth in top line revenues this month was almost entirely driven by the commercial segment, illustrated by the year-on-year increases in achieved rate in the Residential Conference (+41.6%) and Corporate (+6.3%) segments, but was at the expense of a decline in the Leisure segment.
A number of major conferences hosted at ADNEC helped to drive demand for hotel accommodation in the UAE capital this month, including the International Diabetes Federation congress, which attracted more than 7,500 attendees.
In addition to the growth in Rooms Revenue, increases in Non-Rooms Revenues helped hotels in Abu Dhabi to record a 4.8% increase in TrevPAR, to $220.18.
The growth in top line revenues, as well as cost savings, which included a 2.2-percentage point drop in Payroll, contributed to GOPPAR increasing to $78.66 in December.
In contrast to the performance of hotels in Abu Dhabi, political and economic challenges in Qatar continue to negatively impact the performance of hotels in the capital, Doha, which in December contributed to the plummeting top and bottom line performance levels.
For hotels in Doha, a 2.4-percentage point decline in room occupancy, to 61.0%, as well as a 7.8% decline in achieved average room rate, to $163.08, contributed to the 11.4% year-on-year decline in RevPAR, to $99.40.
Profit & Loss Key Performance Indicators – Doha (in USD)
December 2017 v December 2016
RevPAR: -11.4% to $99.40
TrevPAR: -8.3% to $286.37
Payroll: +1.9 pts to 29.6%
GOPPAR: -20.5% to $81.08
In addition, hotels in Doha suffered declines in Non-Rooms Revenues, including Food & Beverage (-6.1%) and Conference & Banqueting (-8.1%), which contributed to the 8.3% drop in TrevPAR, to $286.37.
The decline in revenue levels was further exacerbated by rising costs, which included a 1.9-percentage point increase in Payroll, to 29.6% of total revenue. As a result, GOPPAR at hotels in Doha fell by 20.5% year-on-year to $81.08 for the month of December.
“Despite the sanctions imposed by neighbouring countries, economic growth in Qatar remained surprisingly robust in 2017, with further growth anticipated in 2018. However, the growth has primarily been through the construction sector and spurred by government-led initiatives; meanwhile, the tourism industry has been left floundering, evidenced by the performance of hotels in Doha this month,” added Pablo.
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