Following a very challenging period of trading in recent years, year-on-year growth in revenue and profit at hotels in the Middle East & Africa in January represented a strong start to 2018, according to the latest worldwide poll of full-service hotels from HotStats.
Whilst hotels in the Middle East & Africa suffered a 3.2% year-on-year decline in achieved average room rate in January, to $182.33, this was more than offset by the 3.3 percentage point increase in room occupancy, to 69.1%.
As a result of the movement in volume and price, RevPAR growth at hotels in the region was recorded at 1.6% for the month, to $125.91, which was 7.7% above the RevPAR average ($116.92) for the region in the rolling 12-months to January 2018.
In addition to the increase in Rooms Revenue, hotels in the Middle East & Africa successfully recorded year-on-year growth in Non-Rooms Revenues, which included an increase in Food and Beverage (+2.0%), Conference & Banqueting (+4.9%) and Leisure (+5.2%), on a per available room basis.
The growth across all revenue centres fuelled a 1.4% increase in TrevPAR in January, to $207.75, which is a positive result when compared to the 2.3% decline in Total Revenue suffered by hotels in the region in 2017.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
January 2018 v January 2017
RevPAR: +1.6% to $125.91
TrevPAR: +1.4% to $207.75
Payroll: -1.0 pts to 26.2%
GOPPAR: +5.2% to $87.54
In addition to the growth in TrevPAR, profit levels at hotels in the Middle East & Africa were further boosted by a 1.0-percentage point saving in Payroll, which fell to 26.2% of total revenue.
As a result of the movement in revenue and costs, GOPPAR at hotels in the region increased by 5.2% in January, to $87.54, which was equivalent to a profit conversion of 42.1% of total revenue.
The increase this month is a positive start to 2018 following consecutive years of falling profit per room at hotels in the Middle East & Africa in 2015 (-10.1%), 2016 (-11.6%) and 2017 (-5.2%).
“Trading conditions for hotels in the Middle East & Africa have been very challenging in recent years as the oil crisis, which began in earnest in 2014, led to a reduction in energy trade-related demand as well as reduced government and private sector spending across the region.
Following the crash, oil prices remained relatively low until the fourth quarter of 2017 when they surged to just above $64 per barrel, which had a positive knock-on effect on demand levels. This recovery seems to have continued into January; however, hotels in the region have a lot of ground to make up after several years of decline,” said Pablo Alonso, CEO of HotStats.
Hotels in Sharm El Sheikh were amongst the top performing in January, recording a 111.1% increase in profit per room on the back of a robust increase in revenue and cost savings.
The growth in revenue was led by a 39.7% increase in RevPAR, as hotels in the Egyptian resort recorded significant growth in both room occupancy (+11.8 percentage points) and achieved average room rate (+5.1%).
Profit & Loss Key Performance Indicators – Sharm El Sheikh (in USD)
January 2018 v January 2017
RevPAR: +39.7% to $19.68
TrevPAR: +44.3% to $34.32
Payroll: -4.9 pts to 26.2%
GOPPAR: +111.1% to $8.40
Whilst RevPAR at hotels in Sharm El Sheikh in January remained comparatively low, at just $19.68, in the rolling 12-month average, it was the highest level recorded in this measure since the bombing of the Russian charter flight from the Egyptian resort to St Petersburg in October 2015. And represents a significant recovery from a RevPAR low of just $2.56 recorded in June 2016.
“Whilst the Russian government gave permission for flights to Sharm El Sheik to resume in January 2018, it is likely to be some time before tour operators are in a position to start bringing tourists back to the resort. Aeroflot will be one of the first to resume flights, which are scheduled to commence at the end of February.
If, as hoped, other nations follow suit, it could be the catalyst for a significant recovery in revenue and profit performance for hotels in Sharm El Sheikh in 2018,” said Pablo Alonso, CEO of HotStats.
The growth in top line revenues, as well as cost savings, which included a 4.9-percentage point drop in Payroll, to 26.2% of total revenue, contributed to GOPPAR increasing to $8.40 in January, albeit from a very low base of just $3.98 during the same period in 2017.
In contrast to the positive performance of hotels in Sharm El Sheikh, hotels in Dubai suffered a 1.3% year-on-year drop in profit per room as growth in Rooms Revenue was wiped out by declining Non-Rooms Revenues and rising costs.
For hotels in the UAE’s most populous city, the growth in RevPAR this month was entirely driven by a 1.0-percentage point increase in room occupancy, to 86.9%, and in spite of a 1.1% decline in achieved average room rate, to $272.15, as hotels in Dubai continue to struggle with the downward pressure on rate.
Despite the uplift in volume, hotels in Dubai suffered a decline in Non-Rooms Revenues, including a 2.6% decline Food & Beverage Revenue (-2.6%) on a per available room basis, which contributed to the 0.9% drop in TrevPAR, to $369.62.
The decline in revenue levels was further exacerbated by rising costs, which included a 0.5-percentage point increase in Payroll, to 22.1% of total revenue. As a result, GOPPAR at hotels in Dubai fell by 1.5% year-on-year to $176.43 for the month of January.
Despite the year-on-year drop, January remains a strong month of performance for hotels in Dubai, with profit conversion recorded at 47.7% of total revenue, against a rolling average of 39.6% in the 12-months to January 2018.
Profit & Loss Key Performance Indicators – Dubai (in USD)
January 2018 v January 2017
RevPAR: +0.1% to $236.53
TrevPAR: -0.9% to $369.62
Payroll: +0.5 pts to 22.1%
GOPPAR: -1.5% to $176.43
Read the full article: https://www.eturbonews.com/179269/profit-growth-marks-strong-2018-start-middle-east-north-africa-hotels
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