Hotels in Jeddah increase profits 14%

Hotels in Jeddah experienced a 15 percent growth in RevPAR, driving a 13.8 percent profit growth in June, the latest HotStats survey of full service hotels in six MENA cities by TRI Hospitality Consulting revealed.

Average occupancy at four and five star chain hotels in the city reached 85.4 percent, up by 5.8 percentage points, with average room rates (ARR) increasing 7.2 percent to $226.63 during the month, compared to the same period last year.

Revenue per available room (RevPAR) for the month surged 15.0 percent to $193.62 leading to strong growth in profits in terms of gross operating profit per available room (GOPPAR) by 13.8 percent to $147.95.

"Jeddah achieved the highest occupancy and profitability in the region in June as hotels capitalize on the strong summer demand. Jeddah is a summer holiday destination for domestic travelers as well as the summer seat of the Saudi government. The GOPPAR level of $147.95 achieved by hotels in June is the highest in the city in the past three years. Jeddah is well positioned to perform well throughout the remainder of the year and into early 2013 as the domestic demand is continued to be strong until the Levant is safe to travel. In addition, Jeddah hotels will also benefit from the limited future supply anticipated to enter the market in the short term," said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

Riyadh hotel occupancy levels remained stable in June, contracting marginally by 0.1 percentage points compared to this time last year.

However, the ARR dropped 9.6 percent, causing a 9.8 percent fall in RevPAR. This reduction in top line revenues coupled with an increase in payroll by 2.2 percent resulted in GOPPAR falling 10.3 percent to $129.80.

"The lower performance levels of Riyadh hotels in June reflect the annual performance cycle in which performance levels and profitability reduces in the summer months. The corporate and government segments which are the backbone of demand in the capital drop significantly, resulting in hotels applying discounts on rates to attract business. This is evident with the lower ARR’s achieved in June and we expect this to continue into July and August due the holy month of Ramadan when business activity slows further," Goddard further said.

In Egypt, RevPAR in Sharm El Sheikh increased 33.9 percent to $24.43 in June driven by an 11.7 percent growth in ARR to $43.15 and an increase of 9.4 percentage point in occupancy to 56.6 percent compared to the same month last year. In terms of profits, GOPPAR for the month saw an impressive growth of 91.1 percent to $11.96.

Cairo hotels recorded a 2.3 percentage point increase in occupancy to 43.0 percent in June however ARR fell by 8.7 percent to $108.58. The increase in occupancy was not enough to absorb the decrease in rates with RevPAR falling 3.5 percent to $46.64. As a direct result profitability fell 17.3 percent to a GOPPAR of $38.34.

Hotels in Dubai saw a boost in profits while Abu Dhabi continued to see rates and profits fall in June, the survey said.

ARR in Abu Dhabi fell 8.5 percent to $115.68 in June resulting in a reduction in GOPPAR by 12.6 percent to $53.76.

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