Saudi visa restrictions hit Hilton's Q2 Middle East revenues

Hotel giant also says continuing tensions in Egypt dented RevPAR performance in region
Saudi visa restrictions hit Hilton's Q2 Middle East revenues
Hilton Hotels
By Staff writer
Sun 03 Aug 2014 03:53 PM

Hilton Worldwide’s revenues in the Middle East and Africa took a hit in the second quarter of the year, with the company feeling the squeeze from ongoing tensions in Egypt and visa restrictions in Saudi Arabia.

In the three months ended June 30, the company’s hotels in the region registered a 3.4 percent year-on-year decrease in revenue per available room (RevPAR) to $96.67. Occupancy was down 3.7 percent to 62.3 percent, while average daily rates (ADR) were up 2.3 percent to $155.17.

This compared to a systemwide two percentage point increase in occupancy to 78.4 percent, a 4 percent increase in ADR to $143.19 and a 6.7 percent increase in RevPAR to $112.20.

Commenting on the performance during an earnings call, Hilton Worldwide executive vice president and CFO Kevin Jacobs said: “In terms of our regional performance, strong performance in the Americas was slightly muted by weakness in Egypt, Saudi Arabia, Singapore and Thailand.

“In the Middle East and Africa, RevPAR declined 3.4 percent for the quarter as political strains, visa restrictions in Saudi Arabia and a resurgence of the MERS virus fear continued to negatively affect travel demand.”

The company’s CEO and president, Chris Nassetta, also indicated that the weak performance in the region would continue.

“We expect geopolitical tensions to continue to weigh on travel demand,” he said.

“Our outlook largely assumes a steady state and we anticipate flat RevPAR in the region for 2014 as a positive booking pace and easy comparisons in Egypt somewhat mitigate challenges elsewhere in the region.”

Globally, the company’s adjusted earnings before interest, tax, depreciation and amortisation increased by 10.3 percent to $651 million. This was from total revenues of $2.7 billion, up 12.1 percent.

With construction work ongoing at the Grand Mosque in Makkah, reduced quotas for the number of visas issued to pilgrims for Umrah and Haj will remain in place for 2015, Saudi Arabia’s Ministry of Haj recently confirmed.

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