Hotels in the Middle East & Africa recorded a 6.6-percent year-on-year increase in gross operating profit per available room in August, which was only the third month this year in which profit growth has been achieved. According to the latest worldwide poll of full-service hotels from HotStats, this recent profit growth is a welcome respite from a challenging trading period.
Although hotels in the region suffered a 1-percent decrease in guestroom occupancy, this was more than offset by the 5.8-percent increase in achieved average room rate to $152.85 this month. In response, the increase fueled the 4.2-percent year-on-year increase in RevPAR to $98.72. In addition to the growth in rooms revenue, hotels in the Middle East & Africa recorded an increase in non-rooms revenue, which included a 0.9-percent increase in food and beverage revenue to $53.96 per available room. As a result, TrevPAR in the region increased by 2.4 percent year-on-year to $164.76.
A 0.3-percent saving in payroll to 30.7 percent topped a positive month of performance for hotels in the region and contributed to the 6.6 percent year-on-year increase in GOPPAR to $48.40. This is equivalent to a profit conversion of 29.3 percent of total revenue. “Further to recording a low in both top and bottom line performance in July and a tough period of trading so far in 2017, hotels in the Middle East & Africa were looking to bounce back in August, which they did. And although the profit levels recorded this month were more than a third lower than the year-to-date figure, these small victories will keep Middle East & Africa hoteliers going until the fundamentals of the hotel market begin to improve,” Pablo Alonso, CEO of HotStats, said in a statement.
Makkah
One of the markets which helped to drive the positive performance for the region this month was Makkah, where profit levels soared as a result of the annual Hajj pilgrimage. While hotels in the holy city always benefit from the demand associated with the religious festival, with almost 2 million people descending on Makkah to observe the fifth pillar of Islam, the timing this year, for which the peak day was on Aug. 30, meant the premium performance was pushed into August.
As a result of the demand for hotel accommodation significantly outstripping supply, room occupancy at hotels in Makkah increased by 16.7-percent to 76.8 percent, with achieved average room rate increasing by 75.9 percent to $297.83. As a result of the movement in volume and price, RevPAR at hotels in Makkah was recorded at $228.76, 124.8 percent above the year-to-date average of $172.66.
The market mix in Makkah this month was dominated by the group leisure segment, which accounted for 69.6 percent of total demand, with the rate recorded in this segment soaring by 103.5 percent to $323.26. The significant uplift in revenue, with no real consequent increase in costs meant that profit per room at hotels in Makkah increased by 291.3 percent for the month to $196.69 while TrevPAR rose by 128.1 percent to $303.34. With payroll levels dropping by 12 percent to just 14.3 percent of total revenue, profit conversion at hotels in Makkah was recorded at 64.8 percent of total revenue.
Doha
In contrast to the performance in Makkah, hotels in Doha are struggling as they start to feel the impact of the economic and diplomatic sanctions which have rocked the nation.
This month, year-on-year room occupancy levels in Doha plummeted by 6.8 percent to 50.6 percent, with a 3.2-percent decline recorded in achieved average room rate to $159.59, which is the lowest level recorded in recent years. As a result of the movement in volume and price, RevPAR at hotels in Doha fell by 14.7 percent to $80.77. Additionally, declines were recorded in non-rooms revenues, including food and beverage, which was down by 7.1 percent, and conference & banqueting, which was down by 31.3 percent. These contributed to the 11.5-percent drop in TrevPAR to $208.25.
Escalating costs, which included a 2.7-percent increase in payroll to 35.6 percent of total revenue, added further woe for hoteliers in the Qatari capital and added to the 29.6-percent decline in profit per room to just $44.71. “With ties now severed between nine Arab states and Qatar, demand for hotel accommodation is being hit hard and so are costs, as Qatar produces very little of its own food. A double whammy on the bottom line,” Alonso added.