Dubai hotel profits up 53.3 percent in Q1

47Dubai hoteliers witnessed first-quarter profits rising to 53.3 percent as occupancy levels in Abu Dhabi continued to grow during the period on the back of strong tourist demand, according to the latest HotStats survey by TRI Hospitality Consulting Middle East.

A 5.6 percent rise in average rates this year has boosted profit margins for Dubai hotels with gross operating profit per available room — a key performance indicator for the hotel industry — increasing 4.6 percent to $305.02 or 53.3 percent of total revenue, said Peter Goddard, managing director of TRI Hospitality Consulting.

The survey of full-service, four- and five-star hotels said while Dubai hotels experienced mixed performance during March, the first-quarter performance remained strong with a 4.5 percent increase in revenue per available room, or RevPAR.

“Although hotels experienced a marginal reduction in average room rate [ARR] and occupancy during March compared to the same period last year, occupancies and average rates remain the strongest in the region at an impressive 88.4 percent and $398.71.”

Goddard said the Dubai hotel market continued to grow at an impressive rate, with average rates in the first quarter of 2014 increasing 5.6 percent to $389.99.

“Although the market witnessed stagnant performance during March, the strong growth experienced in January and February ensures the market maintains positive heading into the summer period. A 4.4 percent rise in total revenues coupled with slight reductions in operating expenses allowed the market to achieve an impressive 53.3 percent profit margin or $305.02 per available room,” said Goddard.

Hotels in Abu Dhabi capitalized on a surge in demand during March, boosting profits by 14.3 percent, the report said. Abu Dhabi hotels reported growth in key performance indicators throughout the month of March, as a 4.3 percentage point increase in hotel occupancies coupled with a 2.2 percent increase in ARR to $157.76 lifted RevPAR by 7.8 percent.

“Abu Dhabi has witnessed a consistent rise in demand during the first quarter of 2014, with occupancies increasing 4.4 percentage points to 79.1 percent. The expansion of Etihad Airlines helped draw over 4.5 million passengers to Abu Dhabi International Airport during the first quarter, which saw passenger numbers rise 15.1 percent from the previous year. The leisure segment experienced the highest growth in demand during the first quarter of 2014, with recreational facilities on Yas Island and Saadiyat Island generating increased demand for hotels in the capital,” said Goddard.

According to data compiled by STR Global, the Middle East/Africa region reported mixed performance results during March 2014.

The region reported a 0.7 percent decrease in occupancy to 66.9 percent, a 2.1 percent increase in average daily rate, or ADR, to $178.18 and a 1.4-percent increase in RevPAR to $119.19.

“The Middle East is once again driving the positive growth in the region,” said Elizabeth Winkle, managing director of STR Global.

“Northern Africa is reporting decreases, while Southern Africa’s performance remains flat. Market performance across the region is very mixed. Doha, Dubai and Muscat have achieved occupancy levels over 80 percent, but other markets, including Beirut, Cairo, Riyadh and Sandton, posted occupancies of 38.9 percent, 37.6 percent, 71.8 percent, and 67.9 percent, respectively.

During the first quarter, the Middle East/Africa region’s occupancy increased 1.2 percent to 65.5 percent; its ADR was up 2.9 percent to $179.74; and its RevPAR rose 4.2 percent to $117.72, the STR Global report said.

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