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Sat 7 Jun 2014 10:47 AM

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Abu Dhabi hotel profits soar 25% in April

New data also shows that occupancy rates in the UAE capital increase to 85%

Abu Dhabi hotel profits soar 25% in April

Profits in Abu Dhabi hotels soared 25.8 percent on the back of strong revenues in April while occupancy rates rose to nearly 85 percent, according to latest HotStats data.

The UAE capital attracted a high number of international leisure and MICE visitors that drove occupancy rates of four and five star hotels to 84.6 percent in April.

The strong demand allowed hoteliers to increase yields with the market witnessing a nine percent surge in average room rates (ARR) to $163.32, resulting in revenue per available room (RevPAR) rising by 18.2% to $138.22.

The data showed that a slight reduction in payroll costs helped hotels register a 25.8 percent increase in gross operating profits per available room (GOPPAR) to $103.38.

Peter Goddard, managing director of TRI Hospitality Consulting in Dubai, said: "Abu Dhabi's strong hotel performance in April was driven by a consistent rise in visitor numbers that boosted demand for rooms and F&B activity.

"The capital continued to attract international visitors, with particular growth witnessed from Chinese guests due to the Nu Skin Success Trip that delivered 6,000 guests and 12,500 room nights during the month.

"The incentive trip drove demand for top tourist attractions on Yas Island and benefitted Abu Dhabi's hotels which witnessed a 25.8 percent uplift in profits."

Hotels in Jeddah also reported growth across all major performance indicators as an increase in average rates and non-room revenues boosted the bottom line yields.

Occupancy for the month rose 2.5 percent to 81.4 percent, rising on the back of strong demand. Average room rates increased 9.3 percent closing the month at $268.59 and boosting RevPAR by 12.7 percent to $218.57.

Data showed that strong top-line revenues coupled with a 1.5 percent reduction in payroll costs boosted GOPPAR by 16.8 percent to $174.13.

"April is traditionally a strong month for hotels in Jeddah, as it marks the start of high season that occurs during the summer months. The market witnessed particularly strong performance this year due to corporate demand arising from the delayed commencement of various infrastructure and rail projects," said Goddard.

Riyadh maintained steady demand levels on the back of strong corporate activity during April as hotels reported occupancy growth of 5.4 percent to 73 percent.

Although the market experienced a 4.9 percent decline in average rates to $251.07, RevPAR rose 2.7 percent compared to the same month last year.

Goddard said: "Occupancy levels of hotels in Riyadh typically peak in April before subsiding during the summer months when corporate activity retreats. Despite strong demand and higher occupancies, room revenues were impacted by reduced average rates."

Monthly performance indicators for Kuwait hotels showed a 10 percent decline in occupancy to 54.2 percent that was impacted by lower corporate demand.

The 2.2 percent rise in ARR to $282.52 was insufficient to negate the 13.8 percent decline in RevPAR.

"Hotels in Kuwait suffered from a heavy reduction in corporate demand that could not be offset by higher average rates. Hoteliers have actively pursued government demand in order to cover the shortfall in the corporate segment which drove a decline in room revenues," said Goddard.

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