London – Like the rest of the world, the Middle East’s hotel industry fell off the cliff in March and sunk deeper in April. But if May is any indication, its fortunes may slowly be turning, albeit still well off pre-COVID levels.
Momentum, however, could be blunted over the resurfacing of more cases across the region and some governments unwillingness to shut their economies back down.
May saw month-over-month (MOM) jumps in the region in both total revenue and profitability. RevPAR in the region dropped off precipitously after February, and in May it hit $23.03, which, though 78.4% down from the same time a year ago, was up 5.9% over April, supported by a 5-percentage-point uptick in occupancy. And though occupancy was up in the month, average rate decreased 14.5% in May over April, a sign that hoteliers in the region are resigned to sacrifice rate in order to build back occupancy.
TRevPAR grew 10.5% in the month over the month prior, bolstered by F&B revenue, which saw a 25% MOM increase.
Expenses continued to fall, including labor and total overheads, down 50.6% and 50.5% YOY, respectively. Meanwhile, on a MOM basis, labor and overheads costs were relatively static, a sign of an industry balancing out amid a slow return to normalcy.
After breaking even in March, GOPPAR fell into negative territory in months thereafter. While May remained negative in dollar amount, it was 20% better than April. It’s still down 120.8% YOY.
Profit margin was up 13 percentage points in May over April to -34.8% of total revenue.
Profit & Loss Performance Indicators — Middle East (in USD)
| KPI | May 2020 v. May 2019 | YTD 2020 v. YTD 2019 |
| RevPAR | -78.4% to $23.03 | -46.8% to $65.96 |
| TRevPAR | -80.6% to $36.19 | -47.5% to $112.44 |
| Payroll PAR | -50.6% to $28.27 | -28.2% to $42.04 |
| GOPPAR | -120.8% to $-12.59 | -67.8% to $26.27 |
News that Saudi Arabia will only allow around 1,000 pilgrims residing in the kingdom to perform the Hajj in July will be a huge blow to the Middle East’s overall numbers. Some 2.5 million pilgrims from around the world visit the cities of Mecca and Medina annually for the week-long ritual scheduled to begin in late July.
Still, May numbers, like the broader region, bested April, but we were still depressed on a YOY basis. Occupancy hit 25.1% in the month, 5.6 percentage points higher than April, but average was down $11 and 12% since March, also a trend of the entire Middle East region. RevPAR for May was up 18.5% over April, but is down 86.3% YOY.
A lack of ancillary revenue (total F&B revenue was down to $11.41 on a per-available-room basis, which is down 87% YOY) continues to keep TRevPAR down, but it was up 10% over April (down 85.8% YOY).
There is further optimism in the bottom-line story. Though GOPPAR remained negative in May ($-0.61), it is close to the break-even point and a robust 90% higher than April’s number.
Profit & Loss Performance Indicators — Saudi Arabia (in USD)
| KPI | May 2020 v. May 2019 | YTD 2020 v. YTD 2019 |
| RevPAR | -86.3% to $31.14 | -49.7% to $59.78 |
| TRevPAR | -85.8% to $45.86 | -48.4% to $95.21 |
| Payroll PAR | -47.8% to $27.50 | -22.0% to $37.83 |
| GOPPAR | -100.3% to $-0.61 | -72.2% to $22.65 |
With Expo 2020 in Dubai shifting to 2021, the emirate is looking to salvage and shore up its place as a preeminent leisure and business destination in the Middle East. May numbers were a bit hard to stomach.
After positive GOPPAR in March ($6.48), the KPI has turned viciously negative since. While it was slightly positive over April, at $-30.58, it’s 267.5% lower than in May 2019. The one saving grace for Dubai is that May through September are historically its slowest months in regard to occupancy and rate, hence, revenue and profit.
Profit & Loss Performance Indicators — Dubai (in USD)
| KPI | May 2020 v. May 2019 | YTD 2020 v. YTD 2019 |
| RevPAR | -84.8% to $12.86 | -48.4% to $89.59 |
| TRevPAR | -87.5% to $21.86 | -49.3% to $149.09 |
| Payroll PAR | -57.4% to $30.85 | -34.7% to $49.39 |
| GOPPAR | -267.4% to $-30.58 | -64.1% to $42.26 |