Dubai, Abu Dhabi see mixed hotel results

Dubai profitability is strong in September while Abu Dhabi market stagnates - survey
Dubai, Abu Dhabi see mixed hotel results
(Photo for illustrative purposes only)
By Andy Sambidge
Tue 30 Oct 2012 05:58 PM

Hotels in Dubai showed strong profitability throughout September although the market witnessed a 2.8 percent fall in occupancy, according to the latest HotStats survey by TRI Hospitality Consulting.

It said average room rates (ARR) in the city increased by 3.9 percent to $218.30, while total revenue per available room (TRevPAR) grew 2.7 percent to $311.59.

The city hosted a range of events throughout September allowing hoteliers to yield higher rates, thereby boosting gross operating profit per average room (GOPPAR) 11.3 percent to $93.66, the report said.

Abu Dhabi's hotel market appeared stagnated as performance indicators declined significantly in comparison with September of last year.

ARR fell by 10.6 percent to $124.28, while occupancy rates dropped 0.2 percent to 65.5 percent.

The survey showed that revenue per average room (RevPAR) decreased 10.9 percent to $81.37, and TRevPAR dropped 7.7 percent to $188.93.

The continued pressure on average rates coupled with a proliferation of competition depleted GOPPAR by 18.2 percent to $56.78, the lowest registered profit in the GCC for the month.

Peter Goddard, managing director of TRI Hospitality Consulting, said: "Dubai plays host to a miscellany of events throughout the month of September which helped maintain healthy demand levels after Eid al Fitr.

"As the leisure segment continues to represent the largest demand in the city, the forecasted influx of leisure travellers over the next few months is likely to boost key performance indicators until the end of the year."

He added: "On the other hand, hotels in Abu Dhabi continue to register weak performance mostly due to the city's heavy reliance on corporate demand which remained subdued throughout September."

Riyadh-based hotels showed a strong comeback as indicators bounced back from the slump seen during the summer months.

When compared to the same period last year, occupancy rates in Riyadh show an increase of 4.1 percent reaching 60.5 percent while ARR increased 1.6 percent to $250.60, among the highest in the region.

Hotel performance in Jeddah showed no signs of slowing as occupancies rose 6.2 percent to 81.5 percent in addition to a 3.9 percent increase in ARR to $222.29.

"The steep increase in Riyadh's performance is symptomatic of post-summer lulls, as businesses get back on track and corporate demand is spurred. Festivities and events halted during the holy month resumed, accounting for a large increase in food and beverage revenues which drove an increase in the bottom line," said Goddard.

Hotel performance in Egypt continued to show on-going signs of recovery with occupancy rates in Cairo growing to 55.4 percent, while RevPAR and TRevPAR stood at $63.63 and $125.96 respectively.

The hotel market in Kuwait witnessed a notable growth in overall performance as occupancies increased 10.3 percent to 60.4 percent, a change accredited to a post-summer increase in corporate demand in the city.

ARR varied slightly from the same period last year decreasing 1.8 percent but remained the highest in the region monitored at $255.29.

"Although demand has re-bounded the on-going political troubles in the country could impact future demand as government backed projects remain subdued due to the absence of political stability," said Goddard.

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