HotStats: Occupancy growth doesn't stop MENA profit tumble

Occupancy levels at hotels in the Middle East and North Africa surged to 78.2 percent in April—but it was not enough to prevent profit levels falling for an eighth consecutive month, according to the latest data from analytics firm HotStats tracking full-service hotels.

Profit per room at hotels in MENA fell 2.9 percent in the month to $92.95. Despite the decline, this was a high for 2019 and 9.1 percent above the year-to-date total gross operating profit (GOPPAR) figure at $85.19. 

While occupancy was up, average room rate was down 4.1 percent year over year to $169.65. The combination equated into a 1 percent year-over-year drop in revenue per available room (RevPAR) to $132.70. 

Beyond RevPAR, hotels in the region reported a 0.7 percent decrease in ancillary revenues, which contributed to a 0.9 percent decline in total RevPAR (TRevPAR) to $226.40. This was also a peak for 2019.

The profit performance of MENA hotels was further impacted further by escalating payroll costs, which increased 1.6 percent year over year to $57.98, on a per-available-room basis. This is equivalent to 25.6 percent of total revenue. 

“The almost consistent year-over-year growth in room occupancy, amidst rapid increase in supply over the last 24 months, has been a positive story for hotels in the Middle East & North Africa. The challenge continues to be the falling ADR and, consequently, gross operating profit,” said Michael Grove, director/Hotel Intelligence, EMEA, HotStats.

Abu Dhabi Stumbles

Hotels in Abu Dhabi narrowly missed out on a fourth consecutive month of year-over-year profit growth this month as GOPPAR fell 0.3 percent to $73.38, according to HotStats. 

Mirroring the performance of the region, the drop in profit came despite room occupancy increasing to 87.1 percent, exceeding the most recent high of 86.6 percent recorded in November 2017.

However, mirroring the broader story, ARR was down 3.7 percent in the month to $127.65. The decline in rate wiped out the growth in volume and ancillary revenues, and contributed to the 1.1-percent decrease in TRevPAR to $205.88, the report noted. 

The declining profit levels also were in spite of a 0.9-percent saving in payroll on a per-available-room basis, as hotels in the city appear to have regained control of this measure.  

According to Colliers International's MENA quarterly review, hotels in Abu Dhabi reported an 11 percent ADR increase for Q1, up over the same period from the past two years. 

Manama Grows

In contrast to the decline across the region, hotels in Bahrain's capital enjoyed a second successive month of strong GOPPAR growth, aided by the F1 Gulf Air Grand Prix, which helped secure a 9.1-percent increase in profit per room to $59.82, according to HotStats. 

Room occupancy was once again the driving force behind the profit uplift, increasing 7.6 percentage points to 65 percent, fueling a 12.2-percent year-over-year increase in RevPAR to $105.76, said the report. 

A 3 percent increase in ancillary revenues to $57.95 helped to secure an 8.8-percent increase in TRevPAR for the month to $163.71.  

The only slight disappointment from the strong showing by Manama hotels in April was the 4.9-percent year-over-year increase in payroll to $45.42 on a per-available-room basis.

As STR noted last month, Manama saw its first Q1 increase in RevPAR since 2014 as strong demand (+15.1 percent) outgrew supply (+2.3 percent) and boosted performance levels. March was the best month of the quarter with a 17.4 percent rise in occupancy and a 5.5 percent lift in ADR, which resulted in a 23.8 percent jump in RevPAR.