MidEast hotels see revenues slump to five-year low in July

Latest HotStats report says challenging regional market is likely to continue at least in the short-term
MidEast hotels see revenues slump to five-year low in July
By Staff writer
Tue 05 Sep 2017 01:42 PM

Hoteliers in the Middle East and Africa saw revenue per available room (RevPAR) figures drop to a five-year low in July, according to a new survey.

Data provided by HotStats showed that July marked a low in recent top and bottom line performance as demand levels remained soft during the stifling summer months in the region.

While hotels in the region recorded a 1 percent increase in room occupancy in July to 60.4 percent, it was at the expense of a 12.7 percent drop in achieved average room rate to $140.73, as low demand levels forced hoteliers to discount rates in an attempt to drive top line revenues.

As a result of the movement in volume and price, RevPAR dropped to a monthly five-year low of $84.98, which surpasses the previous low of $93.57 recorded in June 2016.

Although hotels in the Middle East & Africa did their utmost to arrest escalating costs, HotStats said payroll levels increased by 3.2 percent to 34.5 percent of total revenue.

The figures also showed that profit per room in July was at the lowest level recorded in recent years and was 51.8 percent below the average for the 12-months to July at $73.63.

As a result, profit conversion at hotels in the Middle East & Africa fell to a low of just 23.8 percent of total revenue.

Pablo Alonso, CEO of HotStats, said: “The poor profit conversion this month will be unfamiliar to hoteliers in the Middle East & Africa who have become accustomed to recording punchy bottom line performance.

"However, much to the disappointment of hotel owners and operators in the region, the challenging market conditions are likely to continue in the short term. This is not only due to the laboured recovery of the oil industry, but many of the new hotel developments which were either late in the planning stages or had already broken ground when the crisis hit, are now coming to fruition.”

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