Contrasting year-end results for Middle East and African hotels

Published on : Thursday, January 28, 2016

str globalHotels in the Middle East reported negative year-end 2015 results, while hotels in Africa recorded mostly positive year-end 2015 results in the three key performance metrics when reported in U.S. dollar constant currency, according to data from STR Global.



Compared with 2014, the Middle East subcontinent reported a 2.0% decrease in occupancy to 67.4%. Average daily rate for the year was down 2.6% to US$192.82. Revenue per available room dropped 4.6% to US$129.98.



The Northern Africa and Southern Africa subcontinents experienced a 0.2% increase in occupancy to 57.3%. Average daily rate was up 7.1% to US$111.34, and RevPAR increased 7.3% to US$63.74.


Performance of featured countries for year-end 2015 (local currency, year-over-year comparisons):

Egypt recorded a 4.2% increase in occupancy to 53.7% as well as double-digit growth in ADR (+18.9% to EGP616.46) and RevPAR (+23.9% to EGP331.16). Egypt’s RevPAR increased year over year by more than 40.0% in six of the first seven months in 2015. Following the October plane crash in the Sinai Peninsula, flights to Sharm el-Sheikh from many destinations were placed on hold until March 2016, creating a knockdown affect in hotel performance. Other markets, including Cairo and Hurghada, helped performance in Egypt carry on, with ADR up countrywide by 11.5% in December.



Saudi Arabia saw a 2.6% decrease in occupancy to 62.4% but increases in ADR (+3.6% to SAR799.38) and RevPAR (+0.9% to SAR498.49). According to STR Global analysts, the country’s conflict with Yemen and the oil price decline have affected hotel performance in recent months. However, rate growth drove a slight RevPAR increase for the year.



The United Arab Emirates reported decreases in each of the three key performance metrics: occupancy (-0.6% to 74.8%), ADR (-6.2% to AED705.75) and RevPAR (-6.7% to AED528.19). Supply growth (+6.2%) outpaced demand growth (+5.6) in 2015, causing the decline in occupancy, and nearly flat revenue led to the declines in ADR and RevPAR.



Performance of featured markets for year-end 2015 (local currency, year-over-year comparisons):

Cape Town, South Africa, saw a 2.3% dip in occupancy to 66.1%, but a 10.2% rise in ADR to ZAR1,405.62 drove a 7.7% increase in RevPAR to ZAR929.43. Although Cape Town and other parts of South Africa are challenged to fill the increased supply generated from the 2010 FIFA World Cup, hoteliers in Cape Town have seen success with higher rates.



Lagos, Nigeria, experienced decreases in occupancy (-11.3% to 44.7%) and RevPAR (-3.8% to NGN18,557.08). ADR was up 8.5% to NGN41,486.91. STR Global analysts cite Boko Haram conflicts in the country as well as uncertainty during the Nigerian general elections and low oil prices as negative factors contributing to Lagos’ overall performance.



Jeddah, Saudi Arabia, reported nearly flat occupancy performance (+0.1% to 74.3%). Average daily rate in the market was down 2.2% to SAR948.31, and RevPAR dipped 2.1% to SAR704.60. The country has seen significant negative developments following the tragic stampede during the annual Hajj pilgrimage in September.



Manama, Bahrain, experienced decreases in occupancy (-7.6% to 51.5%) and RevPAR (-2.0% to BHD40.99). ADR in the market increased 6.0% to BHD79.58. Although Manama’s overall performance for the year dropped, the market did have some notable achievements in 2015. There was a positive upswing in September as a result of the Muslim holiday Eid al-Adha, when demand growth (+22.6%) outpaced supply growth (+14.2%), resulting in a significant RevPAR growth (+27.5%).



Middle East and Africa performance for December 2015 (U.S. dollar constant currency, year-over-year comparisons):

Compared with December 2014, the Middle East subcontinent reported a 3.4% decrease in occupancy to 66.8%. ADR for the month dropped 4.1% to US$204.27. RevPAR fell 7.3% to US$136.52.


The Northern Africa and Southern Africa subcontinents experienced a 1.2% decline in occupancy to 51.8%. However, ADR was up 11.3% to US$129.46, and RevPAR increased 10.0% to US$67.13.


Source: STR Global.

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