Hotels in Cairo experienced a surge in profitability during the month of April, according to the latest HotStats survey of full-service hotels in six MENA cities by TRI Hospitality Consulting.
The results bode well for future stability and growth in Egypt’s tourism industry provided the peaceful transition to democracy continues.
Average occupancy at 4-star and 5-star chain hotels in Cairo reached 54.6% thanks to 20.6% growth in occupancy compared to the same month last year. But ADR decreased 11.6% during the month, compared to the same period last year and stood at 54.6% and USUS$105.06. RevPAR for the month surged 41.8% to USUS$57.35 leading to profits in terms of GOPPAR increasing by 65.3% to US$59.11.
“The performance of hotels in Cairo continues to improve with occupancy levels maintaining their growth trend in 2012, breaching the 50% threshold for the first time since January 2011. The improving political scene and limited protests occurring throughout Cairo, has provided some much needed stability, which in turn is boosting hotel demand. The increase in occupancy coupled with a 41.4% increase in TRevPAR has resulted in a 65.3% increase in GOPPAR to US$59.11,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.
Hotels in Sharm El Sheikh, Egypt, witnessed strong growth in occupancy, achieving 69.2% occupancy in April, 22% above the same month last year. ADR recorded a 4.8% drop to US$51.79. However, a noticeable drop in overheads and payroll help hotels boost their GOPPAR by 70.5% to US$29.12 during the month.
“As Egypt’s tourism industry rebounds, Sharm El Sheikh continues to benefit in attracting strong tourist numbers. This is attributed to the relatively limited on-going political turmoil in the area and it’s pulling power for leisure demand from the MENA region and charters from across the CIS region. If the presidential elections in May end peacefully and the new government assumes office, we project the country will be able to enjoyed renewed stability and growth, particularly in the tourism industry,” said Goddard.
Mixed results in Saudi Arabia
In Saudi Arabia, hotels in Riyadh and Jeddah saw mixed results in April. Hotels in Riyadh recorded a marginal fall in occupancy and ADR by 1% and 5.6%, respectively, to 69.9% and US$258.25, resulting in a RevPAR of US$180.56. An increase in TRevPAR, driven by food and beverage consumption, helped maintain profitability with GOPPAR increasing by a marginal 0.7% to US$175.56.
Jeddah hotels recorded stronger hotel performance than Riyadh with a 3.1 percentage point increase in occupancy and a 3.9% increase in RevPAR to 79.6% and US$169.20 respectively. A 5.5% increase in TRevPar to US$276.00 mainly driven by increased conference and meeting revenues, and a marginal drop in payroll and overheads resulted in an 8.4% increase in GOPPAR to US$125.12.
Record RevPAR in Dubai, not Abu Dhabi
In the United Arab Emirates, Dubai reported growth in revenues and profits while Abu Dhabi continue to experience a decline in rates and profits in April 2012.
RevPAR in Dubai increased 9.4% to US$311.12 in April, the highest level in three years, driven by 8.6% growth in ADR to US$359.51 and a nominal increase of 0.6% in occupancy. In terms of profits, GOPPAR for the month saw a growth of 7.2% to US$265.84, significantly higher than the other GCC cities surveyed by HotStats. Once again, hotels in Dubai have benefited from consistently strong corporate and leisure demand along with a series of regional and global events held in the city including high profile events such as GETEX, World Cardiology Congress and the Arabian Travel Market which started on April 30.
“Dubai witnessed strong leisure demand in April due to the regional school holidays occurring within the first week of the month, boosting ADR and TRevPAR performances. Large regional and global conferences continued to increase ARR performance with this segment generating rates 11.6% above the same period last year, indicating that hotels in Dubai are not only able to maintain high occupancy levels, but also charging rate premiums during peak periods of demand,” said Goddard.
Performance levels for hotels in Abu Dhabi continued to drop in April compared to the same period last year. A reduction in occupancy levels by 3.6% to 69.3% coupled with a 11.0% fall in ADR to US$140.79, resulted in RevPAR dropping 15.0% to US$96.60. The fall in revenues and a 4.9% increase in payroll expenses during the month resulted in a GOPPAR of US$79.61, 25.4% lower than the same period last year.
“Abu Dhabi hotels are continuing to take a hit in profitability, driven by falling ARR, occupancy and increasing payroll costs. With no sign of recovery insight in the coming months, this is likely to lead to further declines in performance levels as we move in the summer months,” said Goddard.