Strong occupancy no match for falling ADR in Middle East, Africa

Hilton Alexandria King's Ranch, Egypt (Middle East and Africa hotels' high occupancy levels were no match for the 4.7-percent decline in achieved average room rate. )

Hotels in the Middle East and Africa recorded a significant decline in total GOPPAR levels despite seeing high revenue increases across other departments. The region reported GOPPAR dropping 1.8 percent YOY to $99.28 in response to a plunging achieved average room rate, according to the latest survey from HotStats. 
MEA hotels achieved the second highest occupancy recorded in the region last year, jumping 2.3 percent to 71.6 percent in November. However, the increase was no match for ARR, which dropped 4.7 percent to $188.53. The decline pushed hotel RevPAR levels down 1.4 percent to $135.08 that month, making this the fifth month last year with a drop in RevPAR. RevPAR fell 1.8 percent in the 11 months leading up to November 2017 to $114.99 in response to the declines throughout the year, adding insult to injury. 

Profit per room at MEA hotels still claimed second place in 2017 while November's GOPPAR levels matched a high 42.7-percent profit conversion of total revenue. This profit conversion was 35.5 percent higher than the year-to-date GOPPAR for the region at $73.14.

“November is typically a strong month of performance for hotels in the Middle East & Africa and this month was almost entirely fuelled by North Africa and particularly ‘winter sun’ resorts, including Tunisia and Egypt. In contrast, economic challenges borne out of the oil crisis continued to take their toll on performance levels at hotels in the Middle East. Even the biennial Dubai Air Show failed to make a material difference to performance for hotels in the UAE capital, despite a 20-percent increase in trade visitors to the show,” Pablo Alonso, CEO of HotStats, said in a statement. 

Alexandria, Egypt

The city's hotels experienced another month of positive performance growth in November. Alexandria took the lead in the recovery of tourist destinations in Egypt last year. The 4.4-percent rise in occupancy to 68.4 percent drove RevPAR levels up 18.1 percent to $45.05 along with the 10.4-percent increase in ARR to $65.82. The growth in November also contributed to the 66.2-percent rise in RevPAR for the 11 months to November 2017 to $49.35. This was about $20 more than the city's hotels achieved during the same period in 2016 at $29.70.

TrevPAR at Alexandria's hotels achieved a 16.6-percent increase in November thanks to the growth in RevPAR and non-rooms revenue. This included a 12.9-percent increase in food & beverage revenue to $19.41 per available room.

“The tourism industry in North Africa has been reeling from political uncertainty and terrorist attacks since 2011, and Alexandria in particular was the victim of a deadly attack on one of its churches, but its resorts are now starting to claw back their losses as confidence in Egypt as a tourism destination returns. This will be welcome news for hotel owners and operators in the region which have seen performance levels plummet to record lows in recent years, but hopefully they are now back on the road to full recovery,” Alonso said.

Amman, Jordan

Hotels in Amman recorded a stark contrast in performance from the growth Alexandria's hotel saw in November.  Amman suffered declines in performance as the region failed to boost ARR in the period. The 0.1-percent increase in occupancy to 58.8 percent in November couldn't help to offset the 6-percent drop in ARR to $136.35. RevPAR dropped 5.9 percent to $80.13 in response. 

The hotels in Jordan's capital recorded a drop to $32.07 in profit per room in the 12 months to November 2017 to $61.52 during the same period from 2013 to 2014. That's almost half of the profit levels achieved since the oil crisis sparked.