News Column

Abu Dhabi hotel profits up 11.8% in H1

August 1, 2014

Staff Report

Dubai: Abu Dhabi's hotel market recorded an 11.8 per cent profit increase in the first six months of the year, according to the latest data from HotStats.

Profits in Abu Dhabi grew off the back off strong top-line performance as occupancy levels grew by 4.9 percentage points to 78.2 per cent, according to the HotStats survey of full service hotels in five Middle East and North Africa cities.

Revenue per available room (RevPAR) was up 6.8 per cent, while average available room rates (ARR) were stable in the first half of 2014.

"Occupancy growth allowed hoteliers to maintain steady average rates during the first six months of the year, as the market showed signs of stabilisation. ARR have increased for four consecutive months while occupancies have seen a consistent upward trend for nearly two years," said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

In June, ARR and occupancy rates increased by 4.8 percentage points and 3.7 per cent, respectively, while RevPar increase 11.4 per cent to $85.25 (Dh313). Non-room revenue, particularly from conference activities, increased to boost total revenue per available room (TRevPAR) by 9 per cent to $200.96 and pushed bottom line profits up 31.3 per cent to $31.39 during June.

Doha, Qatar saw an 11.4 percentage point growth in occupancy to 75.9 per cent in the first half of the year, driving RevPAR up 11.5 per cent to $166.66 despite ARR falling by 5.3 per cent. According to HotStats, food and beverage activities generated 45.8 per cent of hotel revenues.

"Doha hotels are yet to show signs of stabilisation in average room rates during the first half of the year, although occupancy levels continue to grow on the back of increased demand from international and regional visitors, particularly, Saudi nationals. Profit margins were boosted by strong F&B demand primarily driven by the local residential population which contributed over 45 per cent of total hotel revenue," Goddard said.

Egypt's hotel market continues to be troubled as the economy looks to recover from the 2011 Arab Spring that saw the overthrow of then President Hosni Mubarak. Sharm El Sheikh, a popular holiday destination located on the southern tip of the Sinai Peninsula, saw a 49.2 per cent drop in hotel profits over the first half of the year. In June, occupancy rate dropped 8.9 percentage points to 59.7 per cent and ARR fell 8.7 per cent to $41.07, causing RevPAR to decline by 20.5 per cent.

"June typically generates strong demand from leisure tourists and charters across the CIS region and Europe, however, the travel bans imposed by many European countries during the year diverted visitors to safer holiday destinations. Hoteliers were forced to lower the average rates for leisure visitors and tour groups by 18.1 per cent and 15.0 per cent, respectively, during the first half of the year. Since the two segments constitute the primary demand base for hotels in Sharm El Sheikh, substantial reductions in the top-line performance caused profits to plummet 50.5 per cent in June, which drove Goppar down by 49.2 per cent in the first half of the 2014," Goddard said.

Cairo, however, saw an ARR increase by 5.5 per cent in June and RevPAR rise by 2.7 per cent to $57.64.

"Although June saw an increase in average rates, revenues were not restored during the first half of the year due to the continued pressure on occupancy levels. The hotel market was disrupted by violent," Goddard said.

Occupancy rates in Cairo in June dropped 1.3 percentage points.

In Jeddah, Saudi Arabia, the average room rates jumped 15.5 per cent to $305.92 in June. And while occupancy dropped 3.1 percentage points to 82.3 per cent, ARR drove RevPAR to record 11.3 per cent growth to $251.71, according to HotStats. TRevPAR reached $386.95 due to high corporate and Mice (meetings, incentives, conferences, and exhibitions) demand.

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Source: Gulf News (United Arab Emirates)

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