Hotels in Abu Dhabi and Dubai saw profitability and revenue decline during the month of July, according to the latest HotStats survey of full-service hotels in seven MENA cities by TRI Hospitality Consulting Middle East.
The impact of summer coupled with restrictions on sales and consumption of food and liquor imposed during Ramadan had noticeable impact on hotel performance in the UAE. In the capital, Average Room Rates (ARR) fell 4.7% to US$105.82 and triggered negative growth in Revenue Per Available Room (RevPAR) of 3.8%. Tourism incentives offered by SummerFest Abu Dhabi helped to relieve the decline in occupancy typically seen during this period, as occupancy grew 0.5 percentage points to 50.1%. Nonetheless, due to high operating costs, Abu Dhabi was the only market surveyed by HotStats to see negative profitability levels which fell from marginal levels last year.
Hotels in Dubai also suffered during the month of July, as illustrated in lower room night demand. The reduction in RevPAR by 16.8% was induced by occupancy declining 12.5 percentage points to 54.6%, despite ARR rising 2.2% to US$196.87. During the summer months, Dubai’s hotels are particularly dependent upon leisure tourism due to low MICE and corporate activity. However, the leisure segment was also relatively inactive, as reflected in the decline in room revenue along with food and beverage revenues that left Total Revenue Per Available Room (TrevPAR) at US$242.98, down 10.7 percent from the previous year. An 8.1% reduction in payroll expenses did little to ease the 63.6% decline in profitability to US$37.35.
“As expected, Dubai has seen performance reach the lowest point of the year in absolute terms. This naturally resulted from a lack of events, coupled with the fact that this month is traditionally characterised by low demand. As Ramadan moved earlier into July, occupancies reached the lowest level seen in two years. On the other hand, occupancy levels in Abu Dhabi grew 0.5%, amplified by the success of SummerFest Abu Dhabi which targeted GCC nationals and local residents” commented Peter Goddard, Managing Director of TRI Hospitality Consulting Middle East in Dubai.
Kuwait saw RevPAR decline 2.2% to US$101.02, driven by a fall in ARR of 3.8% to US$236.15. Hotels registered modest growth in occupancy of 0.7 percentage points to 42.8%, while TrevPAR increased 13.9% to US$245.86. Nonetheless, higher operating costs suppressed bottom line profits which declined 16.4% to US$60.20.
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