Rising costs are eating into revenue gains at hotels in the Middle East and North Africa, according to data tracking the region from HotStats.
Hotels in MENA suffered a 2.2% year-on-year decrease in GOPPAR in July, an 11th consecutive month of decline.
At $38.79, GOPPAR was more than $27 below the year-to-date average, and a low for the year so far.
The drop in profit came in the face of positive revenue growth, including a 1.2% YOY increase in RevPAR, as room occupancy grew by 2.3 percentage points.
Hotels in MENA also successfully recorded a 0.1% increase in TRevPAR in the month, which grew to $154.10 in spite of a decline in ancillary revenues, led by a 1.3% YOY decline in F&B revenue to $52.16 per available room.
However, rising costs, which included a slight increase in payroll (up 0.1%) and overheads (up 2.2%), to a cumulative $105.13 per available room, conspired to dampen overall profitability.
Profit & Loss Key Performance Indicators – Middle East & North Africa (in USD)
| KPI | July 2019 v. July 2018 |
| RevPAR | +1.2% to $90.54 |
| TRevPAR | +0.1% to $154.10 |
| Payroll | +0.1% to $52.49 |
| GOPPAR | -2.2% to $38.79 |
“Profit decline in MENA has now become a trend rather than a blip,” said Michael Grove, Managing Director, EMEA, at HotStats. “With average room rate showing no sign of negative year-over-year letup, hoteliers will have to find cost-cutting measures to obtain positive GOPPAR increases in the interim.”
Notably, Dubai, where hoteliers suffered a 48.4% YOY decline in profit per room as the market hit a summer low of $7.49 on a per-available-room basis. The impetus: an 8.3% drop in RevPAR, which fell to $81.35.
Despite a small room occupancy increase, achieved average room rate in the city plummeted by 10.3% YOY.
In addition, cost savings in payroll and overheads were not enough to prevent profit conversion falling to just 4.8% of total revenue in the month month.
Profit & Loss Key Performance Indicators – Dubai (in USD)
| KPI | July 2019 v. July 2018 |
| RevPAR | -8.3% to $81.35 |
| TRevPAR | -7.3% to $156.03 |
| Payroll | -1.8% to $69.36 |
| GOPPAR | -48.4% to $7.49 |
In contrast, it was a relatively positive period for hotels in Doha, where performance appears to have stabilised over the last 12 months after a considerable decline following the economic embargo.
This month, hoteliers in the Qatari capital recorded a 4.9% YOY increase in GOPPAR, due in part to growth across all revenue centres, and led by a 7.1% increase in RevPAR.
And though hotels in the city have struggled with falling rates, room occupancy levels have soared, demonstrated by the 5.4-percentage-point YOY increase this month.
Growing ancillary revenues also contributed to positive TRevPAR, which increased by 8.3% YOY.
Profit & Loss Key Performance Indicators – Doha (in USD)
| KPI | July 2019 v. July 2018 |
| RevPAR | +7.1% to $94.46 |
| TRevPAR | +8.3% to $246.76 |
| Payroll | +10.6% to $75.06 |
| GOPPAR | +4.9% to $65.99 |
