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Tue 29 Apr 2014 07:43 PM

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Abu Dhabi hotel profits rise 14.3% in March as demand surges

Latest HotStats survey also reveals marginal fall in occupancy, average rates at hotels in Dubai

Abu Dhabi hotel profits rise 14.3% in March as demand surges

Hotels in Abu Dhabi capitalised on a surge in demand during March, boosting profits by 14.3 percent, according to the latest HotStats survey by TRI Hospitality Consulting.

Abu Dhabi hotels reported a 4.3 percent increase in hotel occupancy coupled with a 2.2 percent rise in average room rate (ARR) to $157.76 which lifted revenue per available room (RevPAR) by 7.8 percent.

The survey said conference and banqueting continued to provide a strong demand base for the city’s hotels, with ARR being driven by rate growth within corporate and conferencing segments of 12.4 percent and 9.7 percent respectively.

Peter Goddard, managing director of TRI Hospitality Consulting, said: “Abu Dhabi has witnessed a consistent rise in demand during the first quarter of 2014, with occupancies increasing 4.4 percent to 79.1 percent.

"The expansion of Etihad Airlines helped draw over 4.5 million passengers to Abu Dhabi International Airport during the first quarter which saw passenger numbers rise 15.1 percent from the previous year.

"The leisure segment experienced the highest growth in demand during the first quarter of 2014, with recreational facilities on Yas Island and Saadiyat Island generating increased demand for hotels in the capital,” he added.

In Dubai, hotels posted mixed performance during March but first quarter performance remained strong with a 4.5 percent increase in RevPAR.

Although hotels experienced a marginal reduction in ARR and occupancy during March compared to the same period last year, occupancy and average rates remained the strongest in the region at 88.4 percent and $398.71.

A 5.6 percent rise in average rates so this year has boosted profit margins with gross operating profit per available room (GOPPAR) increasing 4.6 percent to $305.02 or 53.3 percent of total revenue.

“The Dubai hotel market continues to grow at an impressive rate. Although the market witnessed stagnant performance during March, the strong growth experienced in January and February ensures the market maintains positive heading into the summer period,” said Goddard.

Doha hotels suffered from a double-digit decline in ARR in March to $222.17, as greater competition for corporate demand impacted rates. Although the city experienced a 5.9 percent rise in occupancy to 75.2 percent, it was insufficient to negate the impact of a 14.9 percent decline in average rates which left RevPAR 7.6 percent lower compared to the previous year.

Goddard said: “Hotels in Doha have seen a recent slide in profit margins primarily caused by decreasing average rates. The mixed performance witnessed in March was ultimately driven down by lower rates, even though overall demand increased."

In Riyadh, hotels have seen demand climbing during the first three months of the year, with occupancies increasing 6.3 percent over the same period last year, the survey said.

The market witnessed a 10.7 percent rise in occupancy levels in March reaching 72.5 percent, offsetting a 4.4 percent decline in average room rates to drive RevPAR up 12.1 percent to $185.40.

“Riyadh hoteliers enjoyed a boost in demand during March, which helped drive an increase in first quarter occupancy levels to 66.7 percent. The corporate and conference markets continue to provide hotels with a solid base of demand driven by government spending on key infrastructure projects in the capital including the Riyadh Metro,” said Goddard.

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