Abu Dhabi hotels enjoy double digit rise in occupancy in April

May 30, 2013 3:30 pm

A 16.7 percentage point rise in occupancy year-on-year helped maintain occupancies in the emirate close to 80% for the fourth consecutive month, reaching 78.5% in April. However, while high occupancy rates led to a 17.1% rise in RevPAR, the increasingly competitive nature of the market placed continued pressure on Average Room Rates (ARR) which declined 7.7% to $144.57.

Nonetheless, Total Revenue per Available Room (TRevPAR) grew 13.3% during the month, supported by the strong RevPAR growth. Profitability levels were also robust as Gross Operating Profit per Available Room (GOPPAR) grew 27.8% to $82.07 elevated by a 3.0 percentage point reduction in payroll costs.

“Abu Dhabi’s hotel market continues to witness green shoots as occupancy levels hover close to 80 percent for the fourth consecutive month, however as competition continues to increase, hotels are facing pressure on rates as new hotels try to capture their market share. Although rates dropped in April, the growth in demand was sufficient enough to see RevPAR levels increase and when combined with lower operational costs, resulted in a 27.8% increase in profits,” commented Peter Goddard, Managing Director at TRI Consulting.

While Abu Dhabi witnessed a substantial growth in demand during April, hotels in Dubai maintained comparable, albeit slightly lower performance levels compared to the same period last year, the report said. RevPAR fell 1.9% to $321.75, as a result of a 0.2 percentage point decline in occupancy to 84.3% coupled with a 1.8% fall in ARR to $381.67. However, year-to-date performance levels remained strong with RevPAR growing 7.2% to $325.40, driven by a growth in occupancy and ARR by 2.7% and 4.0% respectively.

“Although the performance of hotels in Dubai was slightly lower in April, the emirate continues to outperform 2012 with average occupancy reaching 88.2% for the first four months of the year. However as the summer months approach, the market is preparing for historically quieter months, but with the strong performance recorded so far this year, hoteliers are quietly optimistic on a busy summer” explains Goddard.

Renewed protests curb Cairo hotel performance

In Egypt, hotels in Cairo and Sharm El Sheikh recorded mixed results as political instability continued to plague the capital. Hotel demand in Cairo was adversely affected as RevPAR fell 10.3% to $48.56 due to occupancy declining 12.7 percentage points to 43.0%. Nonetheless, ARR reached $113.04, growing 16.2% from the previous year’s low base which was hindered by tens of thousands of people protesting in Tahrir square. TrevPAR declined 13.6% to $91.73, and when coupled with a surge in payroll of 5.4%, resulted in GOPPAR plunging 27.0% to $37.94.

As Sharm El Sheikh’s tourism industry rebounds, it continues to attract tour groups and independent travellers in search of affordable resort destinations. In the month of April, RevPAR grew 11.2% to $34.42, solely driven by ARR increasing 13.9% to its highest point of the year at $52.48, through demand generated by independent travellers. However, occupancy was slightly compromised and declined 1.5 percentage points to 65.6%, as hotels increased average rates with the strengthening of the market.

“The substantial performance discrepancy between Cairo and Sharm El Sheikh for the second consecutive month reinforces the detrimental impact of political instability on tourism in the country. Hotels in Cairo are experiencing negative demand from leisure and corporate travellers, a trend that will remain as long as the destination is perceived as unsafe. Sharm El Sheikh remained unaffected by the activities in Cairo and continued to attract a growing number of visitors through package deals that offer hotels guaranteed base occupancy,” Goddard said.