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Sat 15 Oct 2016 12:10 AM

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Abu Dhabi hoteliers slash costs to offset falling revenue

New data shows that revenues slump 9.2% in August but profits still rise by 2% for month

Abu Dhabi hoteliers slash costs to offset falling revenue

Hotels in Abu Dhabi recorded a two percent year-on-year increase in profit per room in August as management slashed costs to offset the 9.2 percent decline in total revenue, according to the latest data from HotStats.

The decline in total revenue per available room (TRevPAR) during the month was primarily due to a 7.8 percent drop in revenue per available room (RevPAR), the figures showed.

Abu Dhabi hoteliers also suffered declines in both room occupancy (-1.6 percent) and achieved average room rate (-5.6 percent), HotStats said. 

It added that the drop in rooms revenue in the UAE capital was further exacerbated by year-on-year declines in food and beverage (-9.3 percent) and conference and banqueting (-24.4 percent) revenue on a per available room basis.

However, cost savings, which included an 11.3 percent reduction in payroll and an 8.5 percent saving in overheads on a per available room basis, enabled Abu Dhabi hoteliers to effectively cancel out the drop in revenue.

Despite the two percent year-on-year growth in August, profit per room was recorded at just $16.72, equivalent to a conversion of 10.8 percent of total revenue, HotStats added.

The figures also showed that hotels in Doha recorded an 11.9 percent year-on-year decline in achieved average room rate in August, which was the 24th consecutive month of year-on-year declines. This contributed to a 17.1 percent drop in the 12 months to August.

HotStats said the drop in August rate was as a result of declines across the majority of market segments, including best available rate (-7.4 percent), corporate (-17.6 percent) and leisure (-10.9 percent).

In addition, a 3 percent year-on-year rate decline was recorded in the group tours segment, with the volume of demand from this segment doubling in August, the data showed.

Despite cost savings, hotels in Doha suffered a 17.8 percent decline in gross operating profit per room (GOPPAR) in August, with profit per room down 20.4 percent in the 12 months to August.

Despite the significant decline over the last 12 months, profit conversion at hotels in Doha remained relatively strong, at 37.1 percent of total revenue, HotStats added.

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