Hotels in Cairo thrive on the back of Egypt’s economic resurgence

Big 5

Hotels in Cairo recorded a 42.4 percent year-on-year rise in profit per room this month as the city’s hoteliers enjoy a well-earned resurgence in line with the economic recovery of Egypt, the latest data from HotStats showed.

The Egyptian economy is forecast to be one of the strongest growing in the MENA region in 2017 and has been bolstered by a $12 billion loan from the IMF which has reignited investor confidence.

Whilst room occupancy at hotels in the Egyptian capital plummeted by 8.9 percentage points, to 63.6 per cent this month, this was more than offset by the 72.5 per cent increase in achieved average room rate to $97.51, which fuelled a 51.3 per cent year-on-year RevPAR (Revenue per Available Room) increase, to $62.02.

However, although year-on-year growth in Non-Rooms Departments helped drive a TrevPAR (Total Revenue per Available Room) increase of 39.0 per cent this month, the potential profit growth was impacted by cost increases, including Payroll (+36.8 per cent) and Overheads (+30.6 per cent) on a per available room basis.

That said, as a result of the robust top line performance, profit conversion at Cairo hotels remains strong, at 53.3 per cent of total revenue, which is well above the average for the MENA region at 36.7 per cent.

Jeddah Hotels Cut Costs to Drive Profit

Despite recording a 0.7 per cent year-on-year decline in RevPAR this month, cost savings helped hotels in Jeddah achieve a 3.2 per cent uplift in profit per room.

Whilst hotels in the Saudi Arabian resort successfully recorded a 3.0 per cent increase in achieved average room rate this month, to $353.94, this was cancelled out by a 3.0 percentage point decline in room occupancy, to 81.8 per cent.

The resultant drop in RevPAR this month was the ninth consecutive month of year-on-year RevPAR decline for hotels in Jeddah and contributed to the 15.9 per cent drop in this measure for year-to-date 2017.

Declining Non-Rooms Revenues added to the anguish, with a year-on-year drop recorded in Food and Beverage (-3.8 per cent) and Conference and

Banqueting (-19.3 per cent) on a per available room basis, which contributed to the 1.6 per cent fall in TrevPAR, to $438.55.

However, due to cost savings in both Payroll (-7.4 per cent) and Overheads (-3.1 per cent), hotels in Jeddah successfully achieved their first month of year-on-year growth in profit per room in 2017, to $235.96.

Non-Rooms Revenues Prop Up Profit Levels at Riyadh Hotels

Whilst hotels in Riyadh recorded only a 2.7 per cent increase in RevPAR this month, strong growth across Non-Rooms Departments fuelled an uplift in both TrevPAR and GOPPAR for hotels in the Saudi capital.

The growth in RevPAR at hotels in Riyadh was due to an increase in both room occupancy (+1.3 percentage points) and achieved average room rate (+0.6 per cent) and enabled hotels to achieve their first year-on-year increase in RevPAR since the start of 2017.

However, it was in Non-Rooms Revenues where hotels really demonstrated a stand out performance, with significant year-on-year growth recorded in both Food and Beverage (+34.5 per cent) and Conference and Banqueting (+91.7 per cent) revenue on a per available room basis.

The growth in ancillary revenues helped to prop up TrevPAR at hotels in Riyadh, which was recorded at +13.8 per cent, to $252.53.

And thanks to further cost savings, hotels in Riyadh were able to achieve a 29.0 per cent increase in GOPPAR (Gross Operating Profit per Available Room). This is the first time that hotels in the Saudi capital have achieved a year-on-year monthly profit increase for at least 12 months. That said, profit conversion at Riyadh hotels remains robust at 49.4 per cent of total revenue.