CHAIN HOTELS MARKET REVIEW

Hotstats' analysis and statistics on MENA hotel chains

Strengthening demand in Sharm El Sheikh but summer slowdown for Riyadh

Sharm El Sheikh hotels experienced a 4.8 percentage point increase in occupancy levels to 64.6 percent in June and when coupled with a 2.9 percent increase in average room rate (ARR) to USD 38.61, resulted in revenue per available room (REVPAR) growing 11.2 percent, compared to the same period last year. Complemented by solid food and beverage demand, total revenue per available room (TREVPAR) rose by 10.6 percent. Despite a strong revenue performance, hoteliers witnessed a 17.6 percent reduction in gross operating profit per available room (GOPPAR) to USD 7.19. The decrease in profitability was attributed to an escalation in payroll costs by 2.9 percentage points and an overall rise in operating expenses.

The performance of hotels in Riyadh was negatively affected by a 6.1 percentage point reduction in occupancy to 59.1 percent as a direct result of a substantial decrease in demand. A marginal drop in ARR by 0.2 percent resulted in REVPAR declining 9.5 percent. However hotels were able to offset the decline in room revenue with strong food and beverage demand which resulted in a 2.2 percent rise in TREVPAR to USD 249.09 when compared to the same period last year. Increased operational expenses and payroll costs eroded profit margins with GOPPAR experiencing a 7.3 percent decline to USD 96.98.

Falling demand in UAE hotels im a ts hotel ro tability

Hotels in the capital suffered a dramatic decline in profitability in June, with a 96.5 percent drop in GOPPAR to USD 1.11. The reduction in profit levels is characterized by a 10.5 percentage point decrease in occupancy and ARR falling 2.3 percent, leading to a 16.8 percent reduction in REVPAR to USD 71.43. The hotel market in Abu Dhabi was impacted by the traditional summer slowdown and compounded by the onset of Ramadan, which lead to negative performance metrics for the month. An 8.8 percentage point increase in payroll costs increased overall operating expenditures and further compounded the reduction in hotel profit margins.

Four and five star hotels in Dubai also suffered the effects of falling demand in June with occupancy levels falling 9.0 percentage points to 68.4 percent and ARR falling 2.1 percent to USD 206.35 with REVPAR decreasing 13.4 percent to USD 141.22. Hotels in the city also witnessed a significant drop in food and beverage revenues owing to the low demand during Ramadan, which subsequently led to a 16.1 percent drop in TREVPAR. As a result of falling revenue levels, hotel profits were impacted with GOPPAR plummeting 36.4 percent to USD 62.49.

A dramatic fall in occupancy hits Beirut hotel performance

Hotels in Beirut witnessed a significant reduction in REVPAR in June, dropping 20.0 percent to USD 75.22 as a direct result of a decrease in both occupancy and ARR by 11.9 percentage points and 2.5 percent respectively. A marginal growth in food and beverage demand in the city helped offset the low revenues, but failed to escalate profitability for hoteliers, with GOPPAR decreasing 57.8 percent to USD 15.41 in comparison to the same period last year. An increase in payroll costs by 6.3 percentage points also had a direct impact on the reduced financial gains for hotels and failed to alleviate declining profits.