Hotels in the Middle East & Africa achieved an overall increase of 2.9 percent to $44.55 in GOPPAR in June 2017. However, the month was notable for the major disparity in performance across the region as a result of Ramadan and the subsequent Eid al-Fitr celebrations, according to the latest worldwide poll of full-service hotels from HotStats.
The Middle East & Africa region performed ahead of the same period last year, with year-on-year increases in both top and bottom line metrics. However, the observing of Ramadan for almost the entire month of June meant that performance levels were some of the lowest recorded in the last 12 months. This is no better exemplified than in room occupancy, which plummeted to 47.9 percent in June–well below the rolling average of 63.6 percent recorded in the 12-months to June 2017. Very low occupancies were recorded in a range of markets across the region, including Abu Dhabi at 51.0 percent, Doha at 42.1 percent and Kuwait at 35.5 percent. As a result of the reduced volume, hoteliers struggled to drive room rates and non-rooms revenue levels as regional TrevPAR fell by to just $163.60, against a rolling 12-month average of $205.88. However, compared to last June, TrevPAR increased by 1.7 percent, and RevPAR rose by 3.5 percent to $88.84.
The Middle East & Africa region hotels saw its GOPPAR increase in June, despite a 0.8-percent increase in payroll to 33.5 percent of total revenue. Meanwhile, profit per room this month was 44.7 percent below the average for the 12-months to June 2017 at $80.68. “The 30 days of Ramadan ran from late May to late June this year and severely impacted trading in some major markets this month. In addition to impacting commercial demand levels, the Muslim holy month also hit leisure demand, as inbound visitors are reluctant to travel to destinations observing Ramadan as there is doubt about what will actually be open,” Pablo Alonso, CEO of HotStats, said in a statement.
For hotels in Abu Dhabi, RevPAR plummeted by 0.7 percent to a monthly five-year low of just $49.96 in June, 48.7 percent below the average for the 12-months to June 2017, at $97.35. Despite hotels in the UAE capital converting an 8.1-percent decline to $109.61 in TrevPAR into a 16.6-percent increase in GOPPAR, as shrewd hoteliers slashed costs, a loss of $5.09 was recorded at Abu Dhabi hotels this month.
The month of June has punctuated a challenging six months for hotels in Abu Dhabi, with year-to-date declines recorded across key metrics, including GOPPAR down 13.8 percent to $51.71. As a result, profit conversion has fallen to just 28.1 percent of total revenue in the six months to June 2017 although the country saw a payroll increase of 0.1 percent to 49.7 percent.
Sharm El Sheikh
In contrast, headline performance levels at hotels in Sharm El Sheikh increased by significant margins. The Red Sea resort benefited from a surge in tourism, including both Arab and domestic visitors, during the post-Ramadan Eid al-Fitr holidays, albeit from an extremely low base. The 324.1-percent year-on-year growth in RevPAR to $12.13 for the month was led by a 13.8-percent increase in room occupancy to 30.1 percent.
The uplift in volume also enabled growth in non-rooms revenue to be achieved, including food and beverage up by 175.3 percent, which contributed to the 239.3-percent increase in TrevPAR to $20.22. “Arguably, some hotels in the Middle East would be better off closing their doors for the month of June to save the losses. For others, being a destination for Eid al-Fitr celebrations, which mark the end of Ramadan, presents a fantastic opportunity to drive top and bottom line performance,” Pablo added. Despite the margins of growth, especially in GOPPAR up by 77.1 percent, revenue levels at Sharm El Sheikh hotels were not sufficient to outweigh the high cost base and hotels in the Red Sea resort recorded a $1.50 per available room loss for the month of June. As a result, payroll dropped by 48.7 percent to 40.3 percent.