DATA LIBRARY
54 HOTELIER MIDDLE EAST | May 2019 | Volume 18 Issue 05
HOTSTATS MENA CHAIN HOTELS MARKET REVIEW – FEBRUARY 2019
MENA HOTELS MARKET REVIEW
Hotel
ForecastHotel profits continued a downward
spiral in the Middle East & North Africa
in February, as oversupply and the
subdued economic activity weighed on
the tourism market. As a result, GOP-
PAR witnessed an 8.1% year-on-year
decrease, according to the latest data
from HotStats tracking full-service
hotels.
The decrease is part of a chain of
events in the region where the con-
tinuous growth in supply is reinforcing
competition in the marketplace. This
has led hoteliers to drop average
room rates by 3.1% year-on-year in
order to maintain occupancy levels
(+0.5 %).
Moreover, as payroll (+0.3 %) and
overhead costs (+2.2 %) continued to
rise, hotels in the region saw average
GOPPAR fall 4.3% to US$83.0, while
profits dropped 1.5 percentage points
to 37.5%.
This trend is particularly evident
in the Dubai hotel market where the
7.0% growth in overall hotel rooms
supply in 2018, is negatively impacting
the market.Whilst the growth in visitors to Dubai
has allowed hoteliers to increase their
occupancy by 0.8 percentage points to
reach 88.6% in February 2019, they were
unable to regain greater control over
room rates which reduced by 8.4% year-
on-year to $255.82. The deterioration in
top line revenue translated into lower
profit conversions with GOPPAR having
dropped by 9.9% to $170.85.
For hotels in Dubai, February 2019’s
year-on-year decrease in profit per avail-
able room in represented the eighth-con-
secutive month in which GOP PAR dropped
in the UAE’s most populous city.
On a more positive note, the Egyptian
hotel market continued to show signs of
recovery with its capital city, Cairo, post-
ing a 12.5% increase in RevPAR on the
back of a 2.3-percentage point growth
in occupancy to 74.8% as well as a 9.2%
growth in average room rates to $83.12.
Additionally, the average revenue gen-
erated from the Leisure department grew
by 35.5% year-on-year indicating a re-
surgence of leisure travellers to Egypt. As
such, hotels in Cairo saw a 4.9% increase
in bookings from tour groups as well as a
1.2% increase in leisure related book-
ings. On the other hand, the contribution
to total bookings from the corporate seg-
ment declined by 9.2 percentage points.
This can be attributed to the relatively
poor economic environment, coupled
with the increase in volume from other
segments.
Growth in top line revenue for Cairo
hotels has allowed for operational ef-
ficiencies, with Total Overhead Costs
PAR having declined 8.6% year-on-year
to reach $22.56, in February 2019. In a
similar fashion, payroll cost has droppedby 0.7 percentage points year-on-year to
reach 17.2% of total revenue in February- As a result, Cairo experienced a
12.8% increase in GOPPAR to 51.44%.
The positive results of Cairo’s hotel
market speak volumes of Egypt’s tourism
market which has been showing signs
of improvement over the last couple of
years. The country had experienced a
significant 42.1% drop in tourism arriv-
als in 2016 pursuant due to a number
of security incidents. However, since
then the hotel industry has come a long
way and showed signs of recovery with
visitors increasing by 53.6% in 2017 and
39.8-percent in 2018 to reach 1.6 million
visitors annually, making it the strongest
growth market in the MENA region.
CHRIS HEWETT
Director, TRI Consulting.The positive results of
Cairo’s hotel market
speak volumes of Egypt’s
tourism market which has
been showing signs of im-
provement over the last
couple of years”Growth on top line
revenue for Cairo hotels
has allowed for operational
efficiencies with Total Over-
head Costs PAR having
declined 8.6% year-on-year
to reach $22.56, in February
2019”