Abu Dhabi hotels slash costs to boost Feb profits

A 7.7% increase in total revenue was converted to a 29.4% increase in profit per room at hotels in Abu Dhabi in February as hoteliers successfully slashed costs, according to the latest data from HotStats.

There was a mixed performance for hotels in the UAE capital as, despite a 22.4% increase in revenue per available room (RevPAR), declining non-rooms revenues moderated the rise in total revenue per available room (TrevPAR) to US $237.09.

The data showed that thanks to cost cutting, which included a 3.4% reduction in payroll to 27.1% of total revenue, hotels in Abu Dhabi were able to drive a 29.4% increase in profit per room to $92.64.

It added that while hotels in Abu Dhabi were also able to drive a significant increase in profit conversion to 39.1% of total revenue, the 6.5% reduction in non-rooms revenue suggests that potential revenue generating opportunities are being missed.

Hotels in Doha recorded a 20.4% year-on-year decline in profit per room in February, which contributed to the 24% drop in this measure for the past 12 months.

As Qatar continues to face economic challenges, which are primarily associated with the recent oil crisis, hotels in its capital are struggling to slow the downward trajectory in top and bottom line hotel performance, HotStats said.

It added that in addition to the 6.9% drop in rooms revenue at hotels in Doha in February, falling year-on-year revenues across all non-rooms departments led to a 9.8% TrevPAR decline to $313.31.

Profit performance at hotels in Doha has been on a relatively consistent decline since mid-2015 when the impact of declining oil prices started to bite, HotStats noted.

As a result, on a rolling 12-month basis, profit per room has dropped by 34.3% over the last two years, to $100.72 in the 12 months to February.