GOPPAR Falls in MENA Despite RevPAR Growth

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 11^th 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)

“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)

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)