Hotels in Abu Dhabi capitalised on a surge in demand during March, boosting profits by 14.3%, according to the latest HotStats survey of full-service, four and five star hotels by TRI Hospitality Consulting Middle East.
Abu Dhabi hotels reported growth in key performance indicators throughout the month of March, as a 4.3 percentage point increase in hotel occupancies coupled with a 2.2% increase in Average Room Rate (ARR) to US$157.76 lifted Revenue per Available Room (RevPAR) by 7.8%. Conference and banqueting continued to provide a strong demand base for the city’s hotels, with ARR being driven by rate growth within corporate and conferencing segments of 12.4% and 9.7%, respectively. A decline in food and beverage consumption softened Total Revenues per Available Room (TRevPAR) to an increase of 4.0% to US$274.74, however strong top-line revenues coupled with lower payroll costs and operating expenses boosted Gross Operating Profit per Available Room (GOPPAR) by 14.3% to US$103.92.
“Abu Dhabi has witnessed a consistent rise in demand during the first quarter of 2014, with occupancies increasing 4.4 percentage points to 79.1%. The expansion of Etihad Airlines helped draw over 4.5 million passengers to Abu Dhabi International Airport during the first quarter which saw passenger numbers rise 15.1% from the previous year. The leisure segment experienced the highest growth in demand during the first quarter of 2014, with recreational facilities on Yas Island and Saadiyat Island generating increased demand for hotels in the capital” commented Peter Goddard, Managing Director of TRI Hospitality Consulting.
Decline in average rates in Doha impact bottom line
Doha hotels suffered from a double-digit decline in ARR in March to US$222.17, as greater competition for corporate demand impacted rates. Although the city experienced a 5.9 percentage point rise in occupancy to 75.2%, it was insufficient to negate the impact of a 14.9% decline in average rates which left RevPAR 7.6% lower compared to the previous year. A heavy reduction in non-room revenues derived from softer food and beverage consumption was further exacerbated by lower conferencing revenues, causing TRevPAR to fall 7.7%. The decline in both line items impacted the bottom line profits, which fell 10% to US$181.34.
“Hotels in Doha have seen a recent slide in profit margins primarily caused by decreasing average rates. The mixed performance witnessed in March was ultimately driven down by lower rates, even though overall demand increased. Food and beverage operations contribute a significant proportion of revenues, generating approximately 45.0% of total revenues. However, as food and beverage operations have higher operating costs, the lower performance levels, particularly from conferences and banqueting is placing additional pressure on overall profitability margins” commented Peter Goddard.
MICE activity pushes occupancy to 72.5% in Riyadh
Riyadh hotels which have seen demand climbing during the first three months of the year, with occupancies increasing 6.3 percentage points over the same period last year. The market witnessed a 10.7 percentage point rise in occupancy levels in March reaching 72.5%, offsetting a 4.4% decline in average room rates to drive RevPAR up 12.1% to US$185.40.
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