MENA chain hotels market review – September 2015

Dubai and Kuwait hotels experience weakening performance levels

Five and four star hotels in Dubai continued to experience weakening average room rates (ARR) in September, falling 2.3% to US$207.55. Occupancy levels remained stable, albeit marginally lower than the same period last year at 76.6%. The reduction in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 19.0%, driving total revenue per available room (TRevPAR) 8.1% lower to US$282.55. Slightly higher operating expenses compounded the lower overall revenues, reducing gross operating profit per available room (GOPPAR) by 8.7% to US$84.66.

Although Kuwait generally benefits from increased demand during the Eid Al Adha holiday period due to its proximity to Saudi Arabia, the market saw demand levels fall in September with occupancy dropping 8.5 percentage points to 42.6%. The lower demand is more heavily linked to softer activity from the government and corporate markets which is slowing due to the lower oil prices. The fall in demand had a negative impact on all remaining performance indicators with ARR and RevPAR dropping 0.7% and 17.2% respectively. Lower F&B demand compounded the softer room revenue and resulted in GOPPAR reducing 14.6% to US$100.02.

Beirut hoteliers yield strong room rates while corporate demand drives Cairo Hotels

Hotel profits in Beirut grew 25.5% in September with GOPPAR rising to US$26.44 which was driven by strong ARR growth which rose 16.7% to US$156.19. The increase in room rates offset softer demand as occupancy levels fell 6.6 percentage points to 56.3%. The growth in ARR safeguarded a 4.6% increase in RevPAR to US$87.97 and when coupled with a 36.6% increase in F&B revenue, resulted in TRevPAR increasing 13.5% to US$160.05.

Strengthening corporate activity in Cairo sustained the ongoing growth in hotel performance with occupancy levels increasing 5.5 percentage points to 58.6% in September. The increased demand allowed hoteliers to yield a 15.8% growth in ARR and 27.9% rise in RevPAR to US$121.76 and US$71.32 respectively. The higher room revenue had a flow-on effect on TRevPAR and GOPPAR levels which rose 18.3% and 21.3% respectively to US$130.36 and US$61.68.

Manama hotels benefit from the Eid Al Adha holidays

Four and five star hotels in Manama benefited from the extended Eid Al Adha holiday with the market witnessing a 4.3 percentage point increase in occupancy to 60.7 percent. The influx of regional visitors, particularly from Saudi Arabia, allowed hoteliers to generate a 7.3% increase in ARR to US$202.26. The increase in both occupancy and ARR fuelled growth in all performance indicators with TRevPAR increasing 10.1% to US$185.31 and GOPPAR expanding 18.1% to US$67.90.