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Hotels in Mideast, Africa see lower room rates, profits

Oil prices, lower spending continue to take toll on performance at hotels

Gulf News

Dubai

Hotels in the Middle East and Africa suffered a 1.8 per cent year-on-year drop in gross operating profit per room in November 2017, primarily due to lower room rates, according to figures from HotStats.

In its latest report, HotStats said that hotels in the Middle East and Africa recorded a 2.3 percentage point increase in room occupancy in November to 71.6 per cent, which was the second highest occupancy rate recorded in the region in 2017. However, this was cancelled out by a 4.7 per cent decline in average room rates, which fell to $188.

As a result of lower room rates, revenue per available room for the region’s hotels fell 1.4 per cent to $135 in November, making it the fifth month of the year in which revenues per room have fallen.

In contrast to lower room revenues, hotels in the Middle East and Africa saw growth in non-room revenue, including food and beverage (up 2.2 per cent).

“November is typically a strong month of performance for hotels in the Middle East and Africa, and this month was almost entirely fuelled by North Africa, particularly ‘winter sun’ resorts including in Tunisia and Egypt,” said Pablo Alonso, chief executive officer of HotStats.

He added in the report, “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 [city] despite a 20 per cent increase in trade visitors to the show.”

In Abu Dhabi specifically, hotels recorded a 2.1 per cent jump in December in average room rates, which reached Dh497, according to another report from STR, which tracks supply and demand data.

Occupancy rates at the city’s hotels also jumped 8 per cent to 79 per cent. STR analysts attributed the gains to the International Diabetes Federation Congress (that took place from December 4-8), which helped push occupancy rates on four consecutive nights. The month’s occupancy levels are the highest for any December on record since 2004.

Elsewhere in the GCC, room rates in Jeddah fell 4.1 per cent year-on-year in December 2017, STR said, to reach 695 Saudi riyals. Occupancy rates were also lower, sliding 8.4 per cent to 45 per cent, leading to a reduction in revenue per available room by 12 per cent to 313 Saudi riyals.

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