Dubai and Amman hotels feel the pressure of declining profits
Four and five star hotels in Dubai reported weakening performance levels in August, with revenue per available room (RevPAR) declining 10.1% to US$147.45 for the month compared to the same period last year. Due to a marginal rise in occupancy levels by 0.6 percentage points, the contraction in room revenues was led largely by average room rates (ARR) falling 10.8% to US$196.49. The drop in room revenues also impacted total revenue per available room (TRevPAR) which fell 10.6% to US$271.01. Profitability levels remained under pressure as key operating expenses rose, causing gross operating profit per available room (GOPPAR) to drop by 9.8% to US$69.10.
The civil unrest in neighbouring Syria continues to dampen hotel performance in Amman, as occupancy declined by four percentage points to 65.0%. Overall room revenue was further impacted by a 6.2% reduction in ARR to US$152.64, resulted in RevPAR decreasing 11.6% to US$99.27, and as a consequence, TRevPAR contracted by 10.5% to US$188.93. Marginally stronger F&B performance helped offset the slump in room revenues, but failed to elevate overall hotel profitability, leading to an 8.0% drop in GOPPAR to US$76.94.
Hotels in Cairo and Doha witness weakening performance metrics
Despite a 4.4 percentage point decrease in occupancy levels to 58.8%, hotels in Cairo recorded a 3.2% increase in RevPAR to US$72.61. The growth was fuelled by a 10.9% rise in ARR to US$123.44. However, TRevPAR was weighed down by a soft food and beverage demand, resulting in a 0.7% drop to US$133.37. The decrease in overall revenues coupled with a 3.4 percentage point increase in operating costs resulted in GOPPAR decreasing by 12.5% to US$65.44.
Hotels in Doha saw RevPAR decline by 11.1% to US$111.14 in August, as soft demand forced hoteliers to drop rates in order to maintain market share. ARR fell by 11.7% to US$190.04, while occupancy increased by a marginal 0.3 percentage points to 58.5%. A surge in F&B revenues helped offset the lower room revenues but failed to escalate profits for hoteliers, with GOPPAR falling 17.7 percentage points to US$80.64.
Jeddah hotel profits continue to witness steady growth
Hotel demand in Jeddah continued to flourish, as hotels reported a 4.5% increase in RevPAR for the month of August, compared to the same period last year. The surge in room revenues was driven by a solid 6.3 percentage point rise in occupancy levels, offsetting a 3.3% drop in ARR to US$286.66 for the period. The spike in hotel guests had a trickle-down effect on other hotel services, as F&B revenues increased, allowing TRevPAR to grow 5.6%. Complemented by a reduction in payroll expenses, profitability was boosted by the steady increase in top line revenues with GOPPAR growing by 8.8% to US$177.47.
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