Market Report Middle East

Top Line Decline at Doha Hotels Accelerates in Q1 2016

MENA Chain Hotels Market Review - March 2016

The rate of decline in top line revenue performance at Doha hotels has accelerated in the first three months of 2016 as the city, and wider Qatar economy, continues to face challenges, according to the latest data from HotStats.

Year-on-year, RevPAR (Revenue per Available Room) decreased by 20.4% in Q1 2016, with declines in room occupancy (-7.5 percentage points) further exacerbated by falling average room rate (-12.3%). This is well ahead of the 4.6% year-on-year decline in RevPAR recorded in Q4 2015.

For the month of March, RevPAR dropped by 13.3% year-on-year, to $161.02 from $185.64. Whilst Doha hoteliers successfully reduced overhead costs by 2.8% for the month, payroll costs increased by 0.2% to $84.79 per available room, or 22.7% of total revenue.

As a result of the movement in revenue and costs, profit per room fell by 11.5% for the month, contributing to the 20.3% year-on-year decline in Q1 2016.

Whilst Doha hosted OPEC discussions which planned to freeze the production of oil in order to stabilise pricing, the collapse of the talks has coincided with the continued decline in oil prices, suggesting hotels in Qatar’s capital will face a challenging operating environment throughout 2016.

No Sign Of Recovery as Jeddah Hotel Profit Performance Continues to Slide

Profit per room at hotels in Jeddah declined by 22.3% year-on-year in March, which contributed to the 23.2% decline in GOPPAR in Q1 2016, as the economy of Saudi Arabia continues to face challenges due to the ongoing decline in oil prices.

The continued decline in revenue and increasing costs has meant profit per room on a rolling 12-month basis has now dropped below March 2014 levels and is 14.8% lower than the peak in October 2014, recorded at $178.62.

The 14.7% year-on-year decline in RevPAR for the month was as much a result of the 7.1 percentage point drop in occupancy and the 6.3% drop in achieved average room rate. Challenges in costs, including a 2.1% increase in payroll and a 1.3% increase in overheads, added to the woes of Jeddah hoteliers in March, with profit conversion for the month dropping by 6.4 percentage points, to 40.0% from 46.4% during the same period in 2015.

Manama Hotels Cut Costs But Can’t Stop Profit Drop

Whilst astute Manama hoteliers successfully reduced cost levels in both payroll (-3.5%) and overheads (-5.3%) on a per available room basis in March, the savings were not sufficient to offset the 6.6% drop in TrevPAR.

As a result, profit per room at hotels in the Bahrain capital fell by 6.9% year-on-year in March, to $77.70 from $83.50 during the same period in 2015.

Hotels in Manama have managed to recover volume since Q4 2015, with occupancy increasing slightly (+1.2 percentage points) on a rolling 12-month basis, to 54.8%. However, this has been at the expense of achieved average room rate, which has plummeted in the last six months, with the greatest margin of year-on-year decline recorded in October (-14.6%), February (-13.5%) and March (-9.7%).

In line with the GDP of Bahrain slowing to an estimated 3.2% in 2015 from 4.5% in 2014, profit per room has been on a downward trajectory since mid-2015 and was recorded at $55.30 in the 12 months to M 

Graph - MENA Chain Hotels Market Review - March 2016

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HotStats provides two reporting tools to hoteliers:

Our unique profit and loss benchmarking service which enables monthly comparison of hotels’ performance against their competitors. It is distinguished by the fact that it provides in excess of 100 performance metric comparisons covering 70 areas of hotel revenue, cost, profit and statistics providing far deeper insight into the hotel operation than any other tool.

Our latest innovation in daily revenue intelligence, MORSE. Amongst its reporting are daily and highly granular market segmentation metrics as well as distribution channel and source of booking analysis. It takes daily market intelligence to a whole new level.

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