A 7.7 per cent increase in total revenue was converted to a 29.4 per cent increase in profit per room at hotels in Abu Dhabi this month as hoteliers successfully slashed costs, according to the latest data from HotStats.
It was a mixed performance for hotels in the capital of the UAE, as, despite a 22.4 per cent increase in RevPAR (Revenue per Available Room), declining non-rooms revenues, including Food and Beverage (-9.4 per cent) and Conference and Banqueting (-11.3 per cent) pulled TrevPAR (Total Revenue per Available Room) down to a year-on-year increase of just 7.7 per cent, to $237.09.
However, thanks to cost cutting, which included a 3.4 percentage point reduction in payroll, to 27.1 per cent of total revenue, hotels in Abu Dhabi were able to drive a 29.4 per cent increase in profit per room, to $92.64.
Whilst hotels in the city were also able to drive a significant increase in profit conversion, to 39.1 per cent of total revenue from 32.5 per cent during the same period in 2016, the 6.5 percentage points reduction in non-rooms revenue as a proportion of total revenue suggests that potential revenue generating opportunities are being missed by hotels in Abu Dhabi.
Profit Performance at Doha Hotels Continues to Slide
Hotels in Doha recorded a 20.4 per cent year-on-year decline in profit per room this month, which contributed to the 24.0 per cent drop in this measure for the 12 months to February 2017.
As Qatar continues to face economic challenges, which are primarily associated with the recent oil crisis, hotels in its capital are struggling to slow the downward trajectory in top and bottom line hotel performance.
This month, in addition to the 6.9 per cent drop in Rooms revenue at hotels in Doha, falling year-on-year revenues across all non-rooms departments, including Food and Beverage (-11.6 per cent) and Conference and Banqueting (-19.1 per cent) led to a 9.8 per cent TrevPAR decline for month to $313.31.
Profit performance at hotels in the Qatari capital has been on a relatively consistent decline since mid-2015 when the impact of declining oil prices started to bite. As a result, on a rolling 12-month basis, profit per room has dropped by 34.3 per cent over the last two years, to $100.72 in the 12 months to February 2017.
Profit Remains in Negative Territory at Sharm El Sheikh Hotels Despite Revenue Uplift
Although hotels in Sharm El Sheikh successfully recorded a 57.0 per cent year-on-year increase in total revenue in February, profit per room remained in negative territory at -$1.33 for the month.
Whilst hotels in the Egyptian resort began to claw back top and bottom line revenues in October 2016 following more than a year of decline, at just 36.8 per cent in the 12 months to February 2017, room occupancy remains well below historic levels.
However, the recovery appears to be well underway, with hotels in Sharm El Sheikh recording a 112.0 per cent increase in RevPAR for year-to-date 2017, as a result of an 8.7 percentage point increase in room occupancy combined with a 61.5 per cent increase in achieved average room rate, to $34.84.
Whilst RevPAR at hotels in Sharm El Sheikh remains very low compared to other MENA cities at just $11.06 in the 12 months to February 2017, the growth in commercial volume, as well as achieved average room rate in both the corporate (+58.2 per cent) and residential conference (+57.1 per cent) segments in February has helped the market to recover some ground.
Despite the significant growth in top line performance in February, profit per room at hotels in Sharm El Sheikh was completely wiped out by high costs, including payroll, at 39.7 per cent of total revenue and overheads, at 56.2 per cent of total revenue.
As a result, profit per room at hotels in the Egyptian resort fell by 49.4 per cent year-on-year to just -$1.33.
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