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Sat 7 Jul 2012 09:35 AM

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Jeddah hotel occupancy hits three-year high

New report also shows strong performance for Dubai in May but Abu Dhabi rates drop

Jeddah hotel occupancy hits three-year high
(Photo for illustrative purposes only)

Hotels in Jeddah witnessed a nine percent growth in occupancy during May to hit their highest point in three years, according to the latest HotStats survey of full service hotels by TRI Hospitality Consulting.

Average occupancy at four and five star chain hotels in the city reached 82.9 percent with average room rates (ARR) increasing 11.8 percent to $220.15 during the month, compared to the same period last year.

Revenue per available room (RevPAR) for the month surged 25.5 percent to $182.58 leading to strong growth in profits, the index showed.

Peter Goddard, managing director of TRI Hospitality Consulting, said: "Jeddah hotels continue to experience increasing demand with occupancy levels reaching their highest point in the past 36 months, providing Jeddah's hoteliers with an opportunity to increase average rates and improve overall yields.

"The strengthening of average rates, occupancies and RevPAR has funnelled directly through to the profitability of the hotels," he added.

By contrast, Riyadh hotels witnessed a decline in occupancy, achieving 67.3 percent occupancy in May, 3.3 percent lower than the same month last year.

Despite a drop in ARR by 4.6 percent to $255.33, Riyadh reported the highest ARR out of the six cities surveyed.

Goddard added: "The drop in occupancy levels of hotels in Riyadh for May indicates the start of the annual summer slowdown when corporate activity reduces before the summer holidays.

"Historically occupancy levels fall to levels below 40 percent during the summer months as corporate demand falls or shifts to Jeddah as a result of the relocation of the King's Court.

"We anticipate a further reduction in rates in Riyadh in the coming months as hotels try to capture the remaining demand and maintain profitability."

Hotels in Dubai reported growth in revenues and profits while hotels in Abu Dhabi continued to report drop in rates and profits in May, according to the survey.

RevPAR in Dubai increased 9.6 percent to $195.47 in May driven by a 6.5 percent growth in ARR to $247.96 and a nominal increase of 2.3 percent in occupancy to 78.8 percent compared to the same month last year.

Goddard said: "The strength of Dubai's hotel market was once again shown in May with hotels improving in all areas of performance.

"Although historically the summer months result in lower occupancies in the GCC, we believe Dubai will continue to attract high demand as the leisure segment particularly from Saudi Arabia and Kuwait, and some demand from Europe who exploit the attractive rates and packages on offer during this period."

Performance levels for hotels in Abu Dhabi continued to drop in May compared to the same period last year.

A marginal reduction in occupancy levels by 0.7 percent to 64 percent coupled with a 14 percent fall in ARR to $128.67, resulted in RevPAR dropping 15 percent to $82.33.

In Egypt, hotels in Sharm El Sheikh and Cairo experienced double digit growth in occupancy in May, although levels were still relatively low at 62.2 and 51.4 percent respectively.

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