Report: January Profit Plummets in Middle East & North Africa Hotels

INTERNATIONAL REPORT—Hotel profit plummeted in the Middle East and North Africa in January, as oversupply and struggling oil prices took a toll, sending GOPPAR to a 13.9% year-on-year decrease, according to the latest data tracking full-service hotels from HotStats.

The decrease is part of a continued story for the region, which saw GOPPAR decline 6% YOY in 2018; it marked the fifth consecutive month of YOY decline in this measure at hotels in the region.

The drop in profit was led by a 7.5% YOY decrease in RevPAR and a 2.9% drop in non-rooms revenues, which fell to $81.27, equivalent to 41% of total revenue.

Although hotels in the region were able to maintain room occupancy levels in the month, at 69.5%, achieved average room rate fell further in January, dropping by 7.5% YOY to $116.96.

Falling ancillary revenues included declines in food and beverage (down 5.5%) and leisure (down 6.5%). One silver lining was a 0.3% uplift in conference and banqueting revenue, on a per-available-room basis.

As a result of the revenue movement across all departments, TRevPAR fell by 5.7% to $198.23. While this was 1.1% above the TRevPAR recorded at hotels in the region in the rolling 12 months to January 2019, at $195.99, it was almost $25 below this measure in January 2016, at $222.82, illustrating the widening gulf between historic and current performance levels.

Declining total revenue was exacerbated by rising costs, including a 1.7-percentage-point increase in payroll levels as a percentage of total revenue to 27.3%, as well as a 1.8-percentage-point increase in overheads as a percentage of total revenue to 25.2%.

Profit margin was recorded at 38.5% in the month.

“We are now almost five years down the road from when the oil crisis began in the Middle East and there has been little respite from the resultant decline in performance for hotel owners and operators in the region,” said Michael Grove, director of hotel intelligence and customer solutions, EMEA, at HotStats. “With the oil market likely to be the dominant economic driver once again in 2019, the sharp decline in price toward the end of 2018 will undoubtedly be a cause for concern for regional hoteliers.”

 

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