Jeddah Hotels Achieve Record Occupancy While Riyadh Starts to Feel the Summer Slump

MENA Chain Hotels Market Review May 2012

TRI Hospitality Consulting Hotels in Jeddah experienced a 9.0 percentage point growth in occupancy during the month of May, according to the latest HotStats survey of full service hotels in six MENA cities by TRI Hospitality Consulting.

Average occupancy at four and five star chain hotels in the city reached 82.9% with Average Room Rates (ARR) increasing 11.8% to US$220.15 during the month, compared to the same period last year. Revenue Per Available Room (RevPAR) for the month surged 25.5% to US$182.58 leading to strong growth in profits in terms of Gross Operating Profit Per Available Room (GOPPAR), increasing by 29.7% to $142.51.

“Jeddah hotels continue to experience increasing demand with occupancy levels reaching their highest point in the past 36 months, providing Jeddah’s hoteliers with an opportunity to increase average rates and improve overall yields. The strengthening of average rates, occupancies and RevPAR has funnelled directly through to the profitability of the hotels with the GOPPAR increasing by 29.7%” commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Riyadh hotels witnessed a decline in occupancy, achieving 67.3% occupancy in May, 3.3 percentage points lower than the same month last year. Despite a drop in ARR by 4.6 percent to $255.33, Riyadh has reported the highest ARR out of the six cities surveyed. However the reduction in Total Revenue Per Available Room (TRevPAR) by 4.2 percent directly impacted profitability with the GOPPAR falling by 8.9% to $164.84.

“The drop in occupancy levels of hotels in Riyadh for May indicates the start of the annual summer slowdown when corporate activity reduces before the summer holidays. Historically occupancy levels fall to levels below 40 percent during the summer months as corporate demand falls or shifts to Jeddah as a result of the relocation of the King’s Court. We anticipate a further reduction in rates in Riyadh in the coming months as hotels try to capture the remaining demand and maintain profitability” said Goddard.

In Egypt, hotels in Sharm El Sheikh experienced double digit growth in occupancy in May, achieving 62.2% during the month, 21.1 percentage points above the same month last year. However, ARR remained stagnant albeit with a marginal fall of 0.9 percent to $42.09. A greater control over expenses, particularly payroll, has resulted in a 184.7% increase in GOPPAR to $16.91 up from $5.94 in the same month last year.

Cairo hotels recorded a 13.8 percentage point increase in occupancy to 51.4% in May, however ARR fell by 15.6 percent to $101.63. The increase in occupancy absorbed the decrease in rates with RevPAR rising 15.4% to $52.24. Profitability has continued to improve with a 17.7% increase in GOPPAR to $45.38.

HotStats MENA Chain Hotels Market Review – May 2012

Rate growth and strong F&B revenues boost Dubai hotel performance in May

Hotels in Dubai reported growth in revenues and profits while hotels in Abu Dhabi continued to report drop in rates and profits in May 2012, according to the latest HotStats survey of full-service hotels in six MENA cities by TRI Hospitality Consulting.

Revenue Per Available Room (RevPAR) in Dubai increased 9.6% to US$195.47 in May driven by a 6.5% growth in Average Room Rate (ARR) to US$247.96 and a nominal increase of 2.3 percentage point in occupancy to 78.8% compared to the same month last year. In terms of profits, GOPPAR for the month saw a growth of 12.4% to US$145.93. As the month of May historically indicates the start of the summer, corporate demand is replaced by the leisure segment which is attracted to the discounted rates and packages offered during this period.

 “The strength of Dubai’s hotel market was once again shown in May with hotels improving in all areas of performance, especially with occupancy increasing to 78.8%. The spending power of visitors was highlighted by a 9.7 percent increase in Total Revenue Per Available Room (TRevPAR) to $372.21, driven by a 24.7 percent increase in food and beverage spend to $147.93, accounting for 39.7 percent of TRevPAR. Although historically the summer months result in lower occupancies in the GCC, we believe Dubai will continue to attract high demand as the leisure segment particularly from Saudi Arabia and Kuwait, and some demand from Europe who exploit the attractive rates and packages on offer during this period” commented Goddard.

Performance levels for hotels in Abu Dhabi continued to drop in May compared to the same period last year. A marginal reduction in occupancy levels by 0.7 percentage points to 64.0% coupled with a 14.0% fall in ARR to $128.67, resulted in RevPAR dropping 15.0% to $82.33. The fall in revenues resulted in a GOPPAR of $69.79, 17.3% lower than the same period last year.

‘Our HotStats data for Abu Dhabi hotels in May further reiterates the overall reduction in rates, occupancy and profitability witnessed in 2012. Hotels have seen ARR and RevPAR fall by 16.5% and 15.6% respectively since January 2012 resulting in a 20.8% fall in profitability (GOPPAR). We do not envision the situation to improve in the UAE capital in the near future as corporate and conference demand continues to slow on the back of lower business activity, especially in the wake of the continuing European debt crisis” said Goddard. 

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TRI Hospitality Consulting provides a wide range of services to clients in the hotel sector. It has offices in London, Dubai and Madrid.

For more information contact:

Jonathan Langston, managing director 020 7892 2201

David Bailey, deputy managing director 020 7892 2202

Charles Scudamore, director 0207 892 2211

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