Chris Hewett, associate director, TRI Consulting Chris Hewett, associate director, TRI Consulting

ABU DHABI

Despite room occupancy levels at hotels in Abu Dhabi remaining above 80% this month, the relentless decline in achieved average room rate (ARR) is threatening both top and bottom line performance levels, according to the latest data from HotStats. In addition to a 3.1 percentage point drop in room occupancy, achieved average room rate plummeted by 18.6% this month, contributing to the 21.6% year-on-year decline in RevPAR (revenue per available room), to $101.08.

The decline in achieved average room rate In March continues the downward trajectory in this measure, which has been unrelenting, falling by 16.6% over the past 36 months to $135.29 in the 12 months to March 2017 from $162.27 during the same period in 2013/14, with the drop accelerating in Q1 2017. This is despite the country’s economic minister forecasting economic growth of between 3.5-4% in 2017 and the Abu Dhabi Tourism and Culture Authority expecting the growth in the number of visitors to the city to exceed last year’s increase of 8%.

As a result of falling top line revenues, hotels in Abu Dhabi have struggled to maintain profitability, with profit per room falling by 27% over the last 24 months to $54.42 in the 12 months to March 2017.

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AMMAN

Despite recording a 1% increase in total revenue this month, hotels in Amman suffered a 6.1% decline in profit per room as costs continue to escalate.

Whilst hotels in the Jordanian capital successfully recorded a 3% year-on-year increase in room occupancy, to 59.2%, this was cancelled out by a 6.3% decline in achieved average room rate. As a result, Amman hotels recorded a 1.3% year-on-year drop in RevPAR, to $86.60. Despite the decline in rooms revenue, Amman hotels were buoyed by a 1% increase in TrevPAR (total revenue per available room) to $142.09, fuelled by increases in non-rooms revenue, including food and beverage (+4.7%) and conference and banqueting (+1.2%) on a per available room basis.

However, costs are escalating, illustrated by the increase in both payroll (+2.2%) and overheads (+6.5%) this month, and this situation is unlikely to improve in the short-term as the government recently announced a tax increase on fuel prices as well as a number of commodities to combat its budget deficit. As a result of increasing costs cancelling out the growth in total revenue, profit levels at hotels in Amman fell by 6.1% year-on-year in March, to $47.83 per available room.

BEIRUT

Hotels in Beirut have had a strong start to the year, recording a 21% year-on-year increase in profit per room in Q1 2017, which has been on the back of a 7.2% increase in RevPAR, as Lebanon welcomed a new government.

The top line growth at hotels in Beirut in March was primarily fuelled by the 10.1% year-on-year increase in room occupancy, resulting in a 17.1% increase in RevPAR, to $73.38. Despite a 2.9% increase in overheads, hotels in Beirut successfully recorded a 49.5% increase in profit per room for the month, which contributed to a 21% increase in this measure for Q1 2017, marking a very strong start to the year. At $24.73 in the 12 months to March 2017, the profit per room at Beirut hotels represents a peak in recent years and is equivalent to an increase of 4.5 times over the last 36 months, from just $4.45 during the same period in 2013/14.