Dubai hotels close 2014 with a 4.2% increase in profit margins
Dubai's four and five star hotels maintained strong performance levels during the month of December with revenue per available room (RevPAR) increasing by 2.2% to US$308.26. The growth in rooms revenue was driven by a marginal growth in average room rate (ARR) which rose by 0.4% to US$375.11, coupled with a 1.4 percentage point increase in occupancy to 82.2%. Higher F&B and conferencing revenues drove a 3.5% increase in total revenue per available room (TRevPAR) to US$573.30 and supported profitability, as gross operating profit per available room (GOPPAR) increased by 4.0% to US$286.33.
"Dubai hotels closed 2014 with strong occupancy and average room rates in December which saw overall performance levels exceed those achieved in 2013. This increase was driven by a 2.0% increase in ARR, however the market witnessed a marginal decline in occupancy by 0.2 percentage points to close the year at 80.0%. Although the market has been facing challenges with geopolitical issues in Eastern Europe and the revival of Egypt's tourism industry, Dubai continues to steam ahead in attracting an increasing number of visitors as seen with Dubai International Airport toppling London Heathrow for the top spot in international passenger traffic with 70.4 million passengers passing through the airport in 2014", commented Christopher Hewett, Senior Consultant at TRI Consulting in Dubai.
2014 'the year of rebound' for Abu Dhabi hotels
Abu Dhabi hotels recorded an impressive 10.1 percentage point increase in occupancy levels reaching 83.1% in December, driving a 22.8% growth in RevPAR to US$141.55. The strong demand levels allowed hoteliers to command healthier ARR, which grew by 7.9% to US$170.37. The growth in rooms revenue was offset by a reduction in food and beverage revenues which fell by 4.4% and 2.4% respectively during the month; however, TRevPAR performance remained strong, up by 15.8% to US$301.25.
''The Abu Dhabi hotel market achieved strong performance levels across the board in 2014, as hotels benefitted from a 4.6 percentage point rise in occupancy levels on the back of increased tourist numbers. After facing years of oversupply, average rates rebounded during the year with the market breaching threshold required to see average rates increase by 0.8% over 2013. The rise in demand, which was particularly prevalent during the second half of the year, was boosted by the continued promotional campaigns undertaken by the Abu Dhabi Tourism and Culture Authority. The capital was able to capture increased leisure demand during peak season due to its dynamic entertainment offering which was enhanced by the opening of the Yas Mall" commented Hewett.
Doha hotels witness double-digit growth in TRevPAR
Hotels in Doha continued to see rooms revenue rise for the eighth consecutive month in December with occupancy levels increasing by 11.2 percentage points to 71.5% while ARR grew by 4.9% to US$232.08. The rise in both indicators led to a RevPAR surge of 24.4% to US$165.99. The strong demand also benefitted other profit centres, as the F&B and leisure departments enjoyed an upsurge in revenues which corresponded to a 22.8% rise in TRevPAR to US$397.62. The reduction in payroll expenses and operational expenses helped to drive a 23.0% growth in the bottom-line profits as GOPPAR reached US$158.26.
''Hotels in Doha demonstrated a commendable recovery in 2014, as double-digit growth in occupancies moderated the marginal decline in rates and drove RevPAR up by 16.1% to US$160.15. As the supply and demand dynamics began to stabilise from the influx of rooms that came online during the previous years, the market made way for an occupancy growth of 11.0%. The four and five star hotels in Doha also continued to benefit from dining and conferencing revenues which helped drive bottom-line profits up by 25.5%." commented Hewett.
Beirut hotels report a 4.5% growth in profit margins in 2014
The Beirut hotel market reported a significant increase in performance levels during December with a 6.2% increase in ARR to US$142.13, coupled with occupancy levels rising by 9.8 percentage point to 61.7%. The growth in both overall demand and room yields boosted RevPAR by 26.2% to US$87.63. Top-line revenues were heavily driven by the growth in rooms revenue as food and beverage revenues declined during the month by 4.2%. As a result, TRevPAR grew by 10.8% to US$169.46, lifting GOPPAR levels by 35.2% to US$40.73.
"Hotels in Beirut posted a strong recovery in performance levels during the latter part of 2014, largely due to the improved average rates. A 2.1% growth in ARR during 2014 mitigated a marginal decline in occupancy of 0.8 percentage points, allowing RevPAR to post a marginal growth of 0.5%. However, TRevPAR was impacted by lower dining activity coupled with decreased revenues derived from minor operated departments. Despite the reduction in total revenues, hoteliers implemented effective cost cutting measures to improve operational efficiencies which helped profits grow by 4.5% during the year", commented Hewett.
Manama hotels are buoyed by higher leisure demand in 2014
Hotel demand in Manama continued to recover, as hotels reported a 4.1 percentage point rise in occupancy to 46.1% in December. The growth in demand pushed RevPAR up by 5.0% to US$86.78, despite the impact of ARR falling by 4.2% to US$188.17 during the month. Hoteliers dropped rates across corporate, conference and leisure segments in order to raise occupancies during December, which generally witnessed low demand due to cooler weather. However, revenue from non-rooms operations saw improvements, particularly within the F&B department which increased by 4.1% of the total revenue and lifted TRevPAR to US$165.75, up by 11.3% from the previous year. A 3.7 percentage point reduction in payroll expenses boosted bottom-line profits as GOPPAR grew by 25.5% to US$53.10.
"Four and five star hotels in Manama witnessed a gradual improvement in performance during 2014 as occupancy levels started to recover from the beginning of the year due to greater political stability. Rooms revenue grew on the back of occupancy rising by 5.6 percentage points, while ARR remained subdued at US$192.52, down by 0.8% from 2013. Hotels benefitted from higher leisure demand emanating from the Eastern Provinces of Saudi Arabia, as reflected in the volume of growth within the leisure segment" commented Hewett.
Year end excellence for Amsterdam and Brussels
Both cities were amongst the best performing markets in Europe in December, achieving impressive year-on-year growth in gross operating profit per available room (GOPPAR) by 38.6% and 34.2% respectively, according to the latest data from HotStats.
Amsterdam hotels achieved positive movements in 2014 across all key performance indicators with increases in occupancy (+1.6 percentage points) and average room rate (ARR) (+3.7%), contributing to a 5.8% rise in revenue per available room (RevPAR). Additional revenue per available room from beverage (+8.1%), leisure (+5.1%) and food (+4.2%) enhanced total revenue per available room (TRevPAR) levels by 5.1% to €215.26. Despite overheads per available room climbing by 0.9%, hoteliers managed to register a 10.6% increase in GOPPAR, representing a profit conversion of 40.2% for the year.
Hotels in the Belgian capital simultaneously increased occupancy (+2.0 percentage points) but at the cost of ARR declining by 0.9% in the year of 2014. A RevPAR surge of 1.9% combined with a general increase in other revenue streams helped to deliver the TRevPAR growth of 2.2% to €126.63 compared to the city's 2013 results. Despite overheads per available room escalating by 1.1%, payroll decreased by 1.2 percentage points, helping hoteliers to generate a departmental operating profit per available room (DOPPAR) and GOPPAR growth of 3.9% and 6.4% respectively.
Dry December in Barcelona and Zurich
December was a challenging month for hotels in Barcelona with a drop in both ARR (-2.1%) and RevPAR (-0.2%). Negative year-on-year comparisons in non-rooms departments mostly fuelled by revenue per available room from meeting room hire (-37.9%), beverage (-23.8%) and food (-23.1%) caused TRevPAR to decline by 12.1%, contributing to a GOPPAR decrease of 26.5% for the month. However for 2014, the city's results were much more positive with increases in all key performance indicators, as RevPAR, TRevPAR and GOPPAR levels went up by 3.6%, 4.7% and 7.8% respectively.
Zurich hoteliers experienced similar results with negative year-on-year movements across all key performance indicators in the month of December, yet the overall performance of 2014 was not deteriorated by these figures. RevPAR and TRevPAR grew respectively by 1.6% and 1.2% and despite payroll rising by 0.3 percentage points, GOPPAR surged by 2.2% compared to the same period last year.
St Petersburg profits pale
St Petersburg hotels grew RevPAR by 2.9% in the month of December, which together with additional increases in ancillary departmental revenues delivered a TRevPAR growth of 4.7%. However, profit conversion diminished from 19.9% to 18.6% because overheads and payroll increased. As a result, GOPPAR fell by 2.1% to €12.55, demonstrating yet again the need to look beyond RevPAR to see the true performance picture.
Looking at the last twelve monthly results, the Russian city experienced negative year-on-year changes across all key performance indicators, with TRevPAR and GOPPAR falling by 12.3% and 26.3% respectively.
And the winner is … (almost) everyone!
Strong December results contributed to a great year for the UK hotel industry with gross operating profit per available room (GOPPAR) showing growth for London and the UK Provinces compared to 2013. South West hoteliers brought their share to the nation's success with GOPPAR increasing by 9.0% in 2014, according to the latest data from HotStats.
In 2014, hotels in the South West region experienced a 7.9% uplift in rooms revenue per available room (RevPAR) thanks to increases in average room rate (ARR) by 5.2% and in occupancy by 1.8 percentage points. Positive results were recorded in non-rooms departments and total revenue per available room (TRevPAR) surged by 5.5% to £92.29. With efficient payroll management and costs controls, departmental operating profit per available room (DOPPAR) and GOPPAR went up by 5.9% and 9.0%.
For the month of December, South West hoteliers registered positive results across most key performance indicators with payroll being the only exception, thus TRevPAR and GOPPAR figures helped to enhance the overall performance.
Edinburgh soars
Despite occupancy remaining virtually flat in 2014 at 79.3%, hoteliers in Edinburgh managed to drive RevPAR up by 5.3% thanks to increases in all segments' rates with the largest year-on-year movements deriving from tours/groups (+7.8%) and corporate (+5.8%). Similar performances were recorded in ancillary departments leading to a TRevPAR growth of 4.2%. Despite overheads per available room increasing by 3.5%, astute operating costs control and payroll management helped to convert revenue gains into profits with GOPPAR going up by 5.1%.
The month of December also fuelled the overall performance for Edinburgh hotels with RevPAR, TRevPAR and GOPPAR surging by 10.4%, 8.1% and 8.2% respectively.
Leeds leaps
Leeds hoteliers also registered strong December results to make the most of 2014 with surges for the year across all key performance indicators, notably with RevPAR and GOPPAR going up by 12.6% and 17.0% respectively, compared to the same period last year.
In 2014, a stunning 9.9% increase of ARR and an uplift of 1.9 percentage points in occupancy delivered the RevPAR growth. But mixed performances were registered in other departments with revenue per available room declining from food (-0.4%) and beverage (-2.8%), while increasing from room hire (+12.0%), and as a result TRevPAR grew by 6.6%. With hoteliers controlling payroll levels as well as operating costs, GOPPAR increased by 17.0% representing a gross operating conversion of 30.7% (+2.7 percentage points).
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