UAE and Kuwait hotels beat summer slump

UAE and Kuwait hotels recorded strong performances in August, reversing the summer slump according to the latest HotStats survey by TRI Hospitality Consulting Middle East

Abu Dhabi hotels posted a 31.3% growth in RevPar owing to successful tourism promotions by the government such as SummerFest Abu Dhabi, a summer promotion initiated by the Abu Dhabi

Tourism and Culture Authority intended to increase the number of visitors from within the region. More than 40 hotels were involved in promotion Thrilling Stays promotion that offered free entry to Yas Waterworld and Ferrari World on Yas Island.

Average occupancy at four and five star hotels in the city reached 63.1%, growing by 12.4 percentage points, while average room rates increased to US $112.12, up by 5.5% compared to the same period last year.

This drove RevPar, while TRevPAR increased by 24.2% to $159. Additionally, a 7.7% decrease in payroll costs drove GOPPAR up US $13.21 from the previous year.

In Dubai, the Eid Al Fitr weekend reported stronger occupancy and average rates compared to the same period in 2012, driven by the Eid in Dubai campaign.

An 11.3% rise in ARR to US $228.99 coupled with an 8.5 percentage points rise in occupancy to 71.3% drove RevPAR up by 26.4% to $163.35 during the month. Furthermore, a 20.1% growth in TrevPAR drove a 98.3% increase in GOPPAR to US$ 70.63.

TRI Hospitality Consulting managing director Peter Goddard said: “Eid in Dubai marked the culmination of the second phase of the Summer is Dubai campaign that resulted in a substantial growth in visitor numbers, primarily driven by regional demand. The three day Eid holiday is traditionally the busiest weekend of the year, with GCC source markets contributing to the vast majority of foreign visitors driving the occupancy at four and five star hotels upwards of 90 percent. The overall growth witnessed throughout the city is also attributed to Dubai diversifying its entertainment offering to attract visitors through a vast array of shows and events.”

Hotels in Kuwait also benefitted from the Eid holidays due to leisure demand generated from domestic and Saudi Arabian visitors. Occupancy increased 3.4 percentage points 37% while ARR grew 12% to US $271.72, causing a 23.3% increase in RevPAR during the month. Despite the low occupancy levels, average rates for the month of August exceeded year-to-date levels of US$269.48 due to the unofficial rate agreement in the market.

In Saudi Arabia, Jeddah recorded the lowest occupancy levels of the year due to competition from destinations such as Dubaai and Abu Dhabi. Although average rates increased 6.2% to US $273.54 during the month, a 10.1 percentage point drop in occupancy to 69% dragged RevPAR down by 7.3% to US $188.85. The decline in top line revenues coupled with a 7% drop in TRevPAR resulted in GOPPAR falling 12.8% to US $139.73.

Hotels in Riyadh showed improvement in RevPar during August, with occupancy increasing to 32%, while average rates grew 4.6% to US $226.02 driving RevPAR upwards by 9.9% to US $72.30. However, low operating profits and higher payroll costs resulted in a fall in GOPPAR to US $37.93.

In Egypt, Cairo hotels continued to suffer due to the ongoing civil unrest, pushing hotel occupancy to its lowest level since 2011.

Occupancy levels declined 22.1 percentage points to 20.4%, driving RevPAR 44.7% lower to US $24.41. However, due to the depreciation of the Egyptian pound against the US dollar, low performance was not reflected in average rates which grew 15.2% to US $119.62. The fall in TrevPAR and increase in operating profits corresponded to GOPPAR declining 96.9% to US $1.13.

Hotels in Sharm Al Sheikh were not affected as heavily as Cairo, due to the majority of bookings being obtained through tour operators earlier in the year. ARR increased 13.4 percent to US$ 52.66.

However, occupancy was 12.7 percentage points lower compared to the same period last year and caused RevPAR to decline 7.2% to US $30.10. The 9.6% reduction in TRevPAR, coupled with an increase in operating expenses resulted in GOPPAR levels declining 28.2% to US $16.43.

“The political chaos experienced in Egypt during August resulted in extensive travel warnings by countries in the GCC as well as France and the US. Additionally, Russia prohibited tour operators from selling holidays to the country while market-leading tour operators in Germany cancelled holidays bought until mid-September. The security situation will continue to negatively impact the tourism industry and the ramifications of tour operators cancelling trips will be seen on room rates in following months,” commented Goddard.