Shift in Ramadan adversely impacts Middle East & North Africa hotels’ June profits

0a1a-243
0a1a-243

Hotels in the Middle East & North Africa recorded a 6.4% year-on-year decline in profit per room in June, as the month of Ramadan mostly fell in May, and hotels in the region missed their usual demand bump, according to the latest data tracking hotels.

Despite a 10.2-percentage-point increase in room occupancy in the month to 65.0%, it was at the expense of achieved average room rate, which plummeted by 18.0% YOY to $149.12.

Further to the year-to-date peak recorded in May at $183.65, achieved average room rate fell back by almost $35 this month.

This was led by significant rate declines across all key segments, including Corporate (down 8.8%), Individual Leisure (down 20.2%) and Group Leisure (down 32.8%).

The 2.7% decline in RevPAR was tempered by an increase in ancillary revenues, which included a 0.2% uplift in food & beverage revenue and a 17.8% jump in leisure revenue.

As a result, TRevPAR at hotels in MENA fell by 1.4% in June to $171.34.

And despite their best efforts to manage costs, illustrated by the 0.1% saving in payroll to $56.83 per available room, profit levels at MENA hotels fell to $47.25 in the month.

This was the lowest profit per room recorded in 2019 and 57.1% below the year-to-date figure of $74.21.

Profit & Loss Key Performance Indicators โ€“ Middle East & Africa (in USD)

KPI June 2019 v. June 2018
RevPAR -2.7% to $96.91
TRevPAR -1.4% to $171.34
Payroll -0.1% to $56.83
GOPPAR -6.4% to $47.25

Some of the negativity is likely linked to the timing of Ramadan, which is a large demand generator for hotels. It is dictated by the lunar cycle, and this year there were four days of Ramadan in June, compared to 16 days in 2018.

The shift was particularly impactful for hotels in Makkah, which suffered a 69.8% YOY drop in profit per room to $120.54; albeit, this was on the back of an outstanding May, when GOPPAR hit a recent high of $472.27.

For hotels in Makkah, the drop in profit was as a result of a decline across all revenue centres, led by a 59.5% decrease in RevPAR to $170.69, contributing to a 58.7% YOY decline in TRevPAR to $220.83.

On top of the Ramadan shift, a string of recent hotel openings has been detrimental to the city’s demand.

Profit & Loss Key Performance Indicators โ€“ Makkah (in USD)

KPI June 2019 v. June 2018
RevPAR -59.5% to $170.69
TRevPAR -58.7% to $220.83
Payroll -17.0% to $41.09
GOPPAR -69.8% to $120.54

Meanwhile, the timing of Ramadan, or more specifically Eid al-Fitr, was of benefit to hotels in Al Khobar, as the end of the fasting period was marked by an extended holiday weekend.

As a result of the boost in demand, hotels in the Saudi Arabian coastal city recorded 13.2-percentage-point YOY increase in room occupancy to 61.4%, which contributed to a 21.3% increase in RevPAR to $84.85.

And in spite of an 8.1% a drop in ancillary revenues, TRevPAR at hotels in Al Khobar increased by 8.6% overall to $133.92.

The growth in top-line performance was sufficient for hotels in the city to record a 78.2% YOY increase in profit per room, which hit $36.20.

Still, this was more than 30% below the year-to-date figure and was a last bump before hotels in the resort city quiet down for the summer.

Profit & Loss Key Performance Indicators โ€“ Al Khobar (in USD)

KPI June 2019 v. June 2018
RevPAR +21.3% to $84.85
TRevPAR +8.6% to $133.92
Payroll -2.3% to $49.99
GOPPAR +78.2% to $36.20

About the author

Avatar of Chief Assignment Editor

Chief Assignment Editor

Chief Assignment editor is Oleg Siziakov

Share to...