At $151.59, profit per room at Abu Dhabi hotels this month was 1.4 times higher than the year-to-date 2016 figure for the city at $63.33, but was 20.3% below November 2014 levels, according to the latest data from HotStats.
2016 has been a tough year for Abu Dhabi hotels so far, with a challenging economic environment leading to declines across all key measures in the 11 months to November 2016, including occupancy (-2.2 percentage points), average room rate (-8.9%), total revenue (-10.7%) and profit per room (- 13.7%).
Whilst the Grand Prix is a key event in the Abu Dhabi calendar and hotels are typically at capacity enabling management to leverage room rates, illustrated by the $75.60 average room rate premium achieved this month against year-to-date 2016, the impact of the event in 2016 was well below previous years.
Despite RevPAR (Revenue per Available Room) peaking for the year at $183.53, this measure was 17.4% off the high in November 2014 ($222.20) with profit per room also well below 2014 levels ($190.31).
In addition to a 12.2% year-on-year drop in RevPAR, a decline was also recorded in the Food and Beverage (-8.7%) and Conference and Banqueting (-16.8%) departments on a per available room basis, which led to an 11.4% drop in TrevPAR (Total Revenue per Available Room), to $330.07.
RevPAR Drop Belies Profit Problems at Amman Hotels
The 5.9% RevPAR decline at Amman hotels this month masked the deeper issue of a 21.7% year-on-year profit drop for November as hoteliers fought to maintain top line performance.
Whilst achieved average room rate remains less of a problem at hotels in the Jordanian capital, with a 1.6% year-on-year increase recorded for year-to- date 2016, Amman hotels have struggled to capture volume throughout the year, illustrated by the 3.6 percentage point decline this month, to just 58.7%.
In particular, the proportion of demand attributed to the commercial segment in the city has plummeted this month, illustrated by the 10.2% year-on-year decline in rooms revenue in the corporate segment.
As a result, Amman hoteliers have been forced to invest in strategies to capture alternative sources of demand, such as individual and group leisure,
and the greatest increase in expenditure this month has been in Rooms Cost of Sales (+6.2%), which is the cost primarily associated with Online Travel Agents, and Sales and Marketing (+20.8%) on a per available room basis.
Although TrevPAR for Amman hotels fell by just 3.2%, increases in Payroll (+0.5%) and Overheads (+8.1%) resulted in profit per room decreasing to $39.95 for the month.
Astute Beirut Hoteliers Slash Costs to Boost Profit
In addition to achieving a 6.3% year-on-year increase in RevPAR this month, hotels in Beirut successfully slashed costs to record a 47.9% increase in profit per room.
It has been a very mixed year of performance for hotels in Beirut, with profit growth recorded in just five months so far in 2016 and some heavy profit declines recorded across the year, particularly in June, as a result of a bomb blast in the city when profit per room fell by 96.4% to just $1.08.
As concerns over safety have allayed, the number of tourists to the city has increased, illustrated by the increase in the number of roomnights sold this month in the individual leisure (+4.8 percentage points) and group leisure (+3.5 percentage points) segments, which has provided a necessary boost to volume levels, demonstrated by the 6.5 percentage point increase in occupancy for the month.
Despite only achieving a 0.3% increase in TrevPAR, savings were made in Payroll (-6.6%) and Overheads (-13.0%), which fuelled the extraordinary year -on-year profit increase to $35.06.
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