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Hotel occupancy rates surges to 10 per cent

Bahrain News
Wed, 13 Jun 2018
Sandeep Singh Grewal

HOTELS in Bahrain witnessed high occupancy levels in the first quarter of the year, according to a new report.

They registered a 10.6 per cent increase in room occupancy, from 49.1pc in the same period last year to 59.7pc.

This was revealed in the latest EY Middle East Hotel Benchmark Survey covering the hospitality market in the Middle East and North Africa (MENA) region.

The report said the ADR (average daily rate) in Bahrain fell by 6.2pc, from $187 last year to $176.

“Yet the market (Manama) saw a growth in RevPAR of 14.1pc, from $92 in Q1 2017 to $105 in Q1 2018,” said the report.

“The increased occupancy in the first quarter can be attributed to the Bahrain Shopping Festival, which attracted around 122,000 visitors to the country.”

RevPAR is the total bedroom revenue for a period divided by the total available rooms during the period.

Except for Jeddah, Beirut, and Doha, hotel occupancy across the MENA region saw an increase for the period under review.

This increase was primarily due to shopping festivals, improved bilateral relations and overall pleasant climate conditions across the region, said the report.

Dubai achieved the highest ADR and RevPAR across the MENA region, with occupancy reaching 86.9pc with an ADR of $293, which led to an overall RevPAR of $255 in the first quarter of the year.

However, hoteliers in Bahrain are blaming the challenging economic situation in the region and high operating costs for lower revenues.

This is despite an increase in the annual number of tourists and government efforts to boost the sector by spending billions on massive projects such as hotels, shopping malls, health tourism and real estate projects.

Hospitality consultant Hameed Halwachi said occupancy in five-star properties reached between 3pc and 6pc.

“Ramadan is generally a slow season for hotels and the hot weather conditions further stops tourists from travelling,” said Mr Al Halwachi.

“The occupancy levels will pick up during Eid for a week and then we are back to single-digit occupancy.

“Business owners are paying high operating costs to run hotels and experiencing lower profit margins.”

He said another factor was the drop in Bahrainisation rate in the hospitality sector, from 32pc five years ago to less than 7pc currently – which meant dependence on expatriates.

“To make the problem more complex, since 2016 the government has been collecting every quarter 10pc of the hotel revenues, from the earlier 5pc.”

The GDN previously reported that hotels in Manama recorded a 10.9-percentage point decline in room occupancy to 58.1pc and reported a 22.2pc drop in RevPAR to $104.23.

In its latest report (year-on-year in April), the market intelligence provider HotStats said Manama hotels registered declines in non-room revenues, which included 23.8pc year-on-year decrease in food and beverage, 19.1pc decline in conference and banqueting and 16pc drop in leisure revenue.

Elite Hospitality Group chief operating officer Sarosh Aibara said RevPAR was over BD20 for four-star properties.

“There is a huge price war as it has become a buyers’ market with increased competition from hotel operators,” he said.

“Hotels are the largest consumers of electricity and have to pay high utility bills and other expenses.”

Four- and five-star properties are also competing with scores of luxury apartments popular among the Saudi visitors.

“Everyone in the industry is feeling the pinch,” Caravan Group of Hotels chairman Shaikh Mohammed bin Abdulrahman Al Khalifa told the GDN.

“The situation is uncertain because the supply is increasing while the demand is declining,” he said.

“The profit margins are so low that some are barely surviving.”

Shaikh Mohammed said “big spenders” in Saudi and Qatar were not coming to Bahrain like before.

“We lost the Qatar (tourist) market since last year and with the changes happening in Saudi Arabia it is affecting our hospitality industry.

“It’s not rosy anymore with all the operating expenses hoteliers have to pay such as high utility bills and salaries to staff in an uncertain environment.”

Shaikh Mohammed said three-star properties should be allowed to open, maybe under strict conditions, to ensure the flow of revenue.

“There is always a market for three-star hotels.

“Some owners have renovated their three-star properties and are still waiting to get approval from authorities to upgrade to four-star.”

Live entertainment and alcohol were banned in all three-star hotels in 2014 following allegations of “immoral activities”, substandard facilities and hotels being operated as entertainment venues rather than places to stay.

However, Air Transport and Tourism Associates (ATTA) managing director Mohammed Buzizi said it was normal for the business to register a drop in business during Ramadan.

“Add to the challenging economic situation in the region and it has definitely affected hotel businesses,” he said.

“Hoteliers in Dubai, Abu Dhabi and Riyadh share similar sentiments.”

Mr Buzizi said there were more rooms available in the market.

“The market will pick up during Eid and I also feel that the last three months of the year will be promising for the sector in Bahrain.”

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