By Sarah Townsend
Average price of OPEC crude in 2016 decreases 27 percent to $36.13
GCC hotels’ overall profitability has tumbled in line with the drop in oil price over the past year, new data from STR reveals.
The GCC hotels industry reported a 10.3 percent year-on-year decline in revenue per available room (RevPAR) at the end of the first half of 2016, according to STR.
Meanwhile, the average price of OPEC crude oil in 2016 is down 27 percent to $36.13 from the average price per barrel in 2015, STR said citing data from Statista.
STR analysts claimed that RevPAR and gross operating profit per available room (GOPPAR) – the key hotel profitability indicator – have trended similarly to the price of crude oil during the past decade.
Statista says the price of OPEC crude oil averaged $96.29 per barrel in 2014, STR noted, but plummeted 48.6 percent to an average price of $49.49 in 2015.
Over the same time period, corporate business at GCC hotels suffered year-on-year declines in room revenue (3.1 percent), food and beverage (3.8 percent) and other operated departments (5.8 percent). Overall, total revenue for GCC hotels was down 3 percent in 2015, according to 2015 Global Profitability Review.
Philip Wooller, STR’s area director for the Middle East and Africa, said: “Since many of the key cities in the Middle East rely heavily on corporate travel for events and conventions, it is not strange to see overall profitability declines partially as a result of the drop in oil price.
“[But] when you couple that with strong supply growth in the majority of these markets, the downward trend is amplified. At the market level, however, Dubai still maintains one of the highest GOPPAR levels in the world.”For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.