Hotel occupancy in UAE rises, ADR drops

Hotels in the Middle East reported mixed August 2016 results, while hotels in Africa posted mostly flat results in the three key performance metrics when reported in U.S. dollar constant currency, according to data from STR.

Compared with August 2015, the Middle East recorded a 2.3% rise in occupancy to 65.2%. However, average daily rate (ADR) was down 5.4% to US$141.89, and revenue per available room (RevPAR) fell 3.3% to US$92.54.

Africa experienced a 0.8% increase in occupancy to 62.9%, flat ADR at US$126.60 and a 0.9% lift in RevPAR to US$79.60.

Performance of featured countries for August 2016 (local currency, year-over-year comparisons):

Kenya recorded a 9.3% increase in occupancy to 60.3% as well as double-digit growth in ADR (+11.5% to KES15,969.23) and RevPAR (+21.8% to KES9,631.80). The absolute ADR level was the highest on record for Kenya, and the absolute RevPAR level was the highest for the country since September 2012.

Oman saw a 3.0% rise in occupancy to 49.2%, but a 10.0% drop in ADR to OMR57.65 dragged RevPAR down 7.3% to OMR28.34. STR analysts point to low oil prices as well as a third straight month of double-digit supply growth as a reason behind the overall decline. Oman has reported a year-over-year decrease in ADR for 20 consecutive months.

The United Arab Emirates reported an increase in occupancy (+2.1% to 73.4%) but declines in ADR (-8.8% to AED463.51) and RevPAR (-6.8% to AED339.98). Demand (+5.1% year to date) has remained well ahead of last year’s pace, but supply (+5.2% YTD) continues to pressure rate in the region. ADR in the United Arab Emirates has decreased 20 consecutive months in year-over-year comparisons.

Performance of featured markets for August 2016 (local currency, year-over-year comparisons):

Cape Town, South Africa, posted increases across the key performance metrics: occupancy (+5.3% to 63.1%), ADR (+15.8% to ZAR1,319.05) and RevPAR (+22.0% to ZAR831.93). Occupancy in the market has grown 12 straight months in year-over-year comparisons, and ADR has grown 59 consecutive months. In addition to the devaluation of the South African Rand, hotels in the market have benefitted from a lack of supply growth (-0.8% YTD).

Doha, Qatar, reported double-digit decreases in each of the metrics. Occupancy fell 11.2% to 54.4%; ADR was down 10.6% to QAR353.71; and RevPAR dropped 20.6% to QAR192.58. Significant supply growth (+12.1% YTD) coupled with a drop in demand (-7.5% YTD) and the oil crisis have led to 11 consecutive months of double-digit RevPAR decreases in Doha.

Muscat, Oman, reported decreases in each of the three metrics: occupancy (-6.3% to 46.4%), ADR (-9.6% to OMR53.78) and RevPAR (-15.3% to OMR24.94). Numbers in Muscat mirror that of the entire country with four consecutive months of supply growth at 12.4% greatly pressuring performance in the market.