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Sat 1 Feb 2014 10:29 AM

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Dubai hotels post best profits for fourth year running

Strong tourism performance continues throughout 2013, according to latest HotStats survey

Dubai hotels post best profits for fourth year running
The iconic Burj al-Arab hotel. (AFP/Getty Images)

Hotels in Dubai reported the highest profit levels in the region in 2013 for the fourth consecutive year, according to the latest HotStats survey by TRI Hospitality Consulting Middle East.

During December, Dubai continued to record strong performance levels, reflecting the growth experienced throughout the year, the survey said.

Although the market witnessed a 4.5 percent decline in occupancy to 79.5 percent, a 9.1 percent rise in average room rates (ARR) to $368.22 drove revenue per available room (RevPAR) growth of 3.2 percent to $292.70.

Average rates and RevPAR for the month exceeded levels witnessed throughout the year and helped push year to date figures up 6.5 percent and 7.6 percent, respectively, the survey said.

Bottom line performance levels in December were also boosted by a 2.8 percent rise in total revenue per available room (TRevPAR) which was driven by increased MICE revenues and coupled with lower operating costs.

Gross operating profit per available room (GOPPAR) for December increased 3.9 percent to $260.00 and helped drive year to date figures up 10.3 percent to $206.05.

Peter Goddard, managing director of TRI Hospitality Consulting, said: "Occupancy levels in December 2013 were marginally lower than December 2012, which is attributed to an increase in supply compared to the same period last year.

"However average rates were maintained by the minimum stay agreements imposed by hotels during the festive season. A combination of stable demand and increased confidence in the market resulted in hoteliers applying more aggressive yielding strategies which resulted in average rates rising 6.5 percent to $324.44 in 2013."

Elsewhere, the survey showed Jeddah witnessed growth in all key performance indicators for December as corporate demand surged in the city.

The combined effects of a 5.2 percent rise in occupancy to 73.3 percent coupled with a 1.9 percent increase in ARR drove RevPAR up 9.7 percent to $171.05.

"Jeddah was able to offset seasonality issues resulting from reduced leisure tourism during the winter months by attracting an increasing number of MICE visitors. Although December typically registers the lowest occupancies, this year demand was buoyed by events such as the Jeddah International Trade Fair which, according to preliminary figures, attracted 16,000 visitors," said Goddard.

The survey said Doha hotels continued to struggle to elevate key performance indicators which remained under pressure during December, despite a 3.1 percent rise in occupancy to 63.3 percent.

On-going rate reductions resulting from high levels of competition fuelled a 20.8 percent decline in ARR to $226.99 which in turn, drove RevPAR down 16.8 percent to $143.71. An increase in food, beverage and MICE revenues was insufficient to negate the decline in TRevPAR and GOPPAR by 4.5 percent and 11.6 percent, respectively.

Goddard added: "Considering the extent of new supply that came online in 2013, Doha was able to maintain occupancy levels consistent with 2012 at 64.3 percent, as the city attracted an increasing number of leisure visitors.

"The fall in RevPAR during 2013 was driven by a 5.4 percent decline in average rates, as four and five star hotels sought to maintain market share through rate competition. A growth in non-room revenues positively impacted TRevPAR levels, however it was not sufficient enough to stop the decline in profitability in 2013."

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