Dubai hotels end 2013 with occupancy above 80% as rates and profits surge

Hotels in Dubai reported the highest profit levels in the region in 2013 for the fourth consecutive year, according to the latest HotStats survey of full service four and five star hotels in five MENA markets by

TRI Hospitality Consulting Middle East.

During the month of December, Dubai continued to record strong performance levels reflecting the continued growth experienced throughout the year. Although the market witnessed a 4.5 percentage points decline in occupancy to 79.5 percent, a 9.1 percent rise in Average Room Rates (ARR) to US$ 368.22 drove Revenue Per Available Room (RevPAR) growth of 3.2 percent to US$ 292.70. Average rates and RevPAR for the month exceeded levels witnessed throughout the year and helped push year to date figures up 6.5 percent and 7.6 percent, respectively. Bottom line performance levels in December were boosted by a 2.8 percent rise in Total Revenue Per Available Room (TRevPAR) which was driven by increased MICE revenues and coupled with lower operating costs. Gross Operating Profit Per Available Room (GOPPAR) for the month increased 3.9 percent to US$ 260.00 and helped drive year to date figures up 10.3 percent to US$ 206.05.

“Occupancy levels in December 2013 were marginally lower than December 2012, which is attributed to an increase in supply compared to the same period last year; however average rates were maintained by the minimum stay agreements imposed by hotels during the festive season. A combination of stable demand and increased confidence in the market resulted in hoteliers applying more aggressive yielding strategies which resulted in average rates rising 6.5 percent to US$ 324.44 in 2013” commented Peter Goddard, Managing Director of TRI Hospitality Consulting.

Jeddah witnessed growth in all key performance indicators for the month of December as corporate demand surged in the city. The combined effects of a 5.2 percentage point rise in occupancy to 73.3 percent coupled with a 1.9 percent increase in ARR drove RevPAR up 9.7 percent to US$ 171.05. The growth in average rates were attributed to increased demand from corporate and MICE segments which comprised 54.5 percent of the market mix in December. TRevPAR growth of 11.8 percent was propelled by a double digit rise in food and beverage revenues that exceeded year to date consumption and remained relatively unchanged from the previous year. The growth in top line revenues coupled with a decline in payroll costs resulted in GOPPAR levels increasing 31.7 percent to US$142.32.

“Jeddah was able to offset seasonality issues resulting from reduced leisure tourism during the winter months by attracting an increasing number of MICE visitors. Although December typically registers the lowest occupancies, this year demand was buoyed by events such as the Jeddah International Trade Fair which, according to preliminary figures, attracted 16,000 visitors. In addition to the surge in profitability during December, GOPPAR increased 10.7 percent during 2013, due to a rise in leisure demand as more Saudi nationals chose to travel within the Kingdom as a result of ongoing security concerns in key regional destinations such as Egypt, Lebanon and Syria” commented Peter Goddard, Managing Director of TRI Hospitality Consulting.