Middle East hotel occupancy drops 5.5 per cent

Falling occupancy levels at hotels in the Middle East and Africa have led to profit declining at a significant rate, according to the latest worldwide poll of full-service hotels from HotStats.

In May room occupancy fell away, decreasing by 5.5 per cent year-on-year to 59.1 per cent. Significant declines were recorded in non-rooms departments including a drop in conference and banqueting of 10 per cent.

On a rolling 12-month basis, profit per room at hotels in the region was recorded at $73 (£56), which is more than $20 (£15) below the same period in 2014/2015 at $94 (£72) and represents a significant rate of profit decline in recent years.

“May marked the start of Ramadan this year, during which hotels in the region suffer a weakening in hotel performance,” said Pablo Alonso, CEO of HotStats

“The holy festival typically marks the beginning of the summer, which is sure to be another lean period for hotels in the region and although reducing costs should help somewhat, it is likely that profit levels will continue their downward trajectory. This will be much to the disappointment of hotel owners and operators across the region.”

In line with the decline across the region, room occupancy in Riyadh fell by 12 per cent year-on-year to 53 per cent. As a result of the reduced demand, average room rate fell by 20 per cent in May, to $173 (£132).

In contrast to the performance of hotels in Riyadh, hotels in Makkah performed well in May as the holy city welcomed thousands of Muslims who made the pilgrimage from global origins.

The city saw a 5.3 per cent increase in room occupancy to 64 per cent, as well as a 52 per cent increase in average room rate, which hit $305 (£227).

“Profit performance at hotels in Makkah peaks twice per year, once at the beginning of Ramadan and then again in Hajj, which this year will be in August. This year was no different as top and bottom line performance in the holy city soared this month,” added Alonso.