ATM Virtual: Dire April numbers could mark bottom for Middle East

Middle East

Middle East profit per available room turned negative in April, as the region continued to be battered by Covid-19.

According to HotStats, while hotel performance data will continue to be anaemic for the near-term, May could see the first buds of promise emerge, according to one industry leader in the region.

Mark Willis, chief executive of Middle East & Africa at Accor, in a recent interview with Bloomberg, noted an uptick demand in May, including specific signs of positivity in the UAE and Saudi Arabia and a “positive vibe in Dubai”.

April, meanwhile, reached new lows for the region.

Ramadan (April 23rd-May 23rd) did little to improve hotel performance, as even partial easing during the holy month led to a spike in infections.

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Occupancy dropped 58 percentage points from the same time a year ago, said HotStats.

That, combined with a 33 per cent year-over-year decline in average room rate, led to an 83 per cent year-over-year drop in RevPAR.

The huge decline in rooms revenue, combined with little to no ancillary revenue, resulted in an 85 per cent year-over-year decrease in total revenue (TRevPAR).

The dramatic fall in revenue, even with a let-up in expenses, including a 52 per cent year-over-year drop in labour costs on a per-available-room basis, led to a 115.3 per cent year-over-year decrease in GOPPAR to $-14.62.

Profit margin also fell into negative territory, down 83.4 percentage points to -43 per cent.

As Dubai moves further into reopen mode (on April 24th, it eased a full curfew to eight hours at night and allowed restaurants to reopen at limited capacity; and in early May allowed public parks to reopen and hotel guests to access private beaches), its hotels hope that April performance numbers will be a thing of the past.

Like the total Middle East region, occupancy in the month dropped precipitously (down 71 percentage points) and, combined with a decline in average rate of 59 per cent year-on-year, led to a 93 per cent year-on-year drop in RevPAR.

Meanwhile, a more dire picture is emanating from Dubai, where a recent survey by the Dubai Chamber of Commerce revealed that 70 per cent of businesses in the emirate expected to close within the next six months.

Dubai is one of the most diversified economies in the Gulf and hyper reliant on travel and tourism dollars.

Within the survey, some 74 per cent of travel and tourism companies said they expected to close in the next month alone.

In an attempt to manufacture revenue, some Dubai hotels, short on guests, are now doubling up as offices.

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HotStats provides a unique profit-and-loss benchmarking service to hoteliers from across the globe that enables monthly comparison of hotels’ performance against competitors.

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