Revenue of major Mena hotels decline in May due to early Ramadan, says EY
The majority of four- and fivestar hotels in the Middle East and North Africa witnessed a decline in revenue and occupancy rates in May. However, hotels in Saudi Arabia and Abu Dhabi bucked the trend in part due to an influx of pilgrims in the holy month of Ramadan, according to advisory firm EY.
“Due to Ramadan beginning in mid-May this year and the onset of the summer season, the overall decline in performance in the region is unsurprising,” said Yousef Wahbah, EY’s Mena real estate, hospitality and construction sector leader.
“Saudi Arabia, however, benefited from the large influx of pilgrims during the holy month. Over two million pilgrims were expected to have visited the holy city of Makkah, resulting in increased [occupancies] across Makkah, Madinah and Jeddah, with declines only in Riyadh.”
However, the region’s hospitality market will continue to see a drop in key performance indicators including occupancy rates, average daily rates (ADR) and revenue per available room (RevPAR) during the summer season, “as business travel declines and conferences and events are at a minimum”, he said.
Abu Dhabi maintained the highest occupancy for the month of May at 76.6 per cent, rising 8.9 percentage points
from May 2017, according to EY’s latest Mena Hotel Benchmark Survey report. ADR decreased by 11.9 per cent yearon-year to $89 in May, although overall the emirate maintained its RevPAR of $68 from last year.
Dubai’s hospitality market witnessed a dip across all indicators once the peak season of events and conferences reached a close at the end of
April. Occupancy rates declined by 16.4% points from 77.3 per cent in May 2017 to 60.9 per cent and ADR dropped by 0.7 per cent to $236, resulting in a 21.7 per cent year-onyear drop in RevPAR to $144.
Saudi Arabia, on the other hand, witnessed growth in hotel revenue in most cities examined in the report. Jeddah recorded the highest ADR in the region of $351, resulting in the highest RevPAR of $259 in May, while Makkah hotels saw the sharpest increase in earnings – a 60.4 per cent year-on-year increase in RevPAR to $143 in May 2018.
Madinah hotel RevPAR increased by 18.3 per cent to $135 and occupancy increased by 4.2 percentage points to 68 per cent in May 2018.