October's plunge in MENA hotel performance threatens profit

Although hotels in the Middle East and Northern Africa achieved a 1.9-percent year-on-year rise in GOPPAR, October marked another month of sharp declines in the region, according to a worldwide poll from HotStats. MENA hotels saw a 3.1-percent drop in achieved average room rate to $178.09. However, a 4.8-percent rise in room occupancy to 68.5 percent offset the low ARR levels, driving RevPAR up by 4.1 percent to $121.96.

In terms of non-rooms revenue, hotels in the Middle East & Africa recorded strong growth. Food and beverage rose by 1.4 percent as conference and banqueting increased by 1.2 percent. In turn, these revenue levels contributed to the increase in TrevPAR by 2.7 percent to $208.13. However, the Middle East and Africa's economy still faces challenges within the economy, particularly in the oil exporting countries. The region's achieved ARR has declined by more than $22 over the last 36 months in response to these challenges. Meanwhile, revenue from other departments dropped by about 16 percent during the same period to $86.17 in the 12 months to October 2017.

Despite a 0.4-percent rise in payroll to 25.9 percent of total revenue, the region's hotels achieved a 1.9-percent increase in GOPPAR to $81.42 with a profit conversion of 39.1 percent of total revenue. This month's increased year-to-date GOPPAR levels at hotels in the region remain 5.9 percent below the totals in the same period in 2016 at $70.51. Profit per room also saw significant drops to $74.77 in the 12 months to October 2017 and by almost 30 percent in the last 36 months. “The rollercoaster performance of hotels in the Middle East & Africa continued in October.  Although hotels in the region have successfully recorded six months of year-on-year profit per room growth in 2017, the remaining five months have seen GOPPAR levels declining at a more rapid rate. As a result, it is hard to see hotels in the region recording a positive outcome for the year,” Pablo Alonso, CEO of HotStats, said in a statement.