HotStats MENA chain hotels market review - September 2012

Hotels in Dubai showed strong profitability throughout the month of September this year, although the market witnessed a 2.8 percentage point decrease in occupancy. Average Room Rates (ARR) in the city increased by 3.9% to $218.30, while Total Revenue per Available Room (TRevPAR) grew 2.7% to $311.59. The city hosted an array of events throughout the month of September allowing hoteliers to yield higher rates, thereby boosting Gross Operating Profit per Average Room (GOPPAR) 11.3% to $93.66.

Abu Dhabi's hotel market appeared stagnated as performance indicators declined significantly in comparison with September of last year with ARR decreasing 10.6% to $124.28, and occupancies dropping 0.2 percentage points to 65.5%. Revenue per Average Room (RevPAR) decreased 10.9% to $81.37, and TRevPAR dropped 7.7% to $188.93. The continued pressure on average rates coupled with a proliferation of competition depleted GOPPAR by 18.2% to $56.78, the lowest registered profit in the GCC for the month.

"Dubai plays host to a miscellany of events throughout the month of September, namely INDEX and Gitex exhibitions which helped maintain healthy demand levels after Eid al Fitr. As the leisure segment continues to represent the largest demand in the city, the forecasted influx of leisure travellers over the next few months is likely to boost key performance indicators until the end of the year. On the other hand, hotels in Abu Dhabi continue to register weak performance mostly due to the city's heavy reliance on corporate demand which remained subdued throughout September," commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

September also saw demand distribution normalise between the two surveyed markets in Saudi Arabia. Riyadh based hotels showed a strong come back as indicators bounced back from the slump seen during the summer months. When compared to the same period last year, occupancy rates in Riyadh show an increase of 4.1 percentage points reaching 60.5% while ARR increased 1.6% to $250.60, among the highest in the region. Food and beverage revenues increased significantly suggesting an increase in events previously paused in accordance with the holy month of Ramadan. This upsurge in festivities accounted for a 10.5% rise in TRevPAR as well as a 10.1% increase in profits to $131.4.

Similarly, hotel performance in Jeddah showed no signs of slowing as occupancies rose 6.2 percentage points to 81.5% in addition to a 3.9% increase in ARR to $222.29. A rise in corporate demand owing to the return of business activity justified the 12.6% increase in RevPAR to $181.24 which, coupled with an increase in food and beverage revenues, drove a growth in TRevPAR of 10.1% to $278.90 leading to an 11.8% increase in GOPPAR to $123.03.

"The steep increase in Riyadh's performance is symptomatic of post-summer lulls, as businesses get back on track and corporate demand is spurred. Festivities and events halted during the holy month resumed, accounting for a large increase in food and beverage revenues which drove an increase in the bottom line," commented Goddard

Egypt Hotel markets mend themselves as Kuwait forges ahead with remarkable success

Hotel performance in Egypt continues to show on-going signs of recovery. Occupancy rates in Cairo grew to 55.4%, while RevPAR and TRevPAR stood at $63.63 and $125.96 respectively. Demand in Cairo has long been divided proportionately between corporate travellers and leisure seekers, both of whom have restored their confidence in the destination allowing for GOPPAR to grow 19.2% to $63.79. Sharm el Sheikh also boasted increases in performance indicators as occupancy grew 5.3 percentage points to 74.5% and RevPAR increased 5.1% to $32.10. Profits in the popular destination remained subdued at $20.61, mostly due to reduced rates granted to travel agents and inbound tour groups.

"Our HotStats data for September shows a steadily recovering Egyptian market with hotels in Cairo registering their highest profits in a year. Sharm el Sheikh is well on its way to recovery, in spite of travel agent fees that continue to diminish profit margins. With the city's high season approaching we anticipate continued growth for the remainder of 2012 and early 2013," commented Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

The hotel market in Kuwait witnessed a notable growth in overall performance as occupancies increased 10.3 percentage points to 60.4%, a change accredited to a post-summer increase in corporate demand in the city. ARR varied slightly from the same period last year decreasing 1.8% but remained the highest in the region monitored at $255.29 predominantly due to the rate agreement. TRevPAR in the city increased 15.2% to $300.07 as corporate demand grew allowing for hotels to post the highest profitability rates in the region for September at $137.84, outperforming all other markets surveyed.

"Kuwait experienced a growth in demand in September due to increase in business activity after the summer period. The hotel market continues to benefit from the rate agreement which maintains ARR at the top of the region. Although demand has re-bounded the on-going political troubles in the country could impact future demand as government backed projects remain subdued due to the absence of political stability," said Goddard.