Conflict ruins trade for Israeli operators

Pity the Israeli hotelier. Occupancies in Jerusalem in 2001 (down 60%) and Tel Aviv (down 40%) are eloquent evidence of just how hard the country's political turmoil has affected business.

In Jerusalem, in particular, there are few places for hoteliers to look for comfort. Nearly every figure in the PKF City Survey 2002 speaks of tough times: occupancy ran at less than 35%, income per available bedroom (yield) at just over US$32 (£21). And things are getting no better this year, according to preliminary figures from PKF.

How Jerusalem's hoteliers should or could combat the fall in business is unclear. Bedroom rates have been cut to varying degrees, but whether this makes any difference is debatable. Some argue that if guests are going to feel unsafe, paying less for their stay is not going to make them feel any safer.

If there is a brighter note in Israel, it is in the holiday resort of Eilat, where bedroom yield is a relatively painless 9% down. Eilat has been less troubled by bombings, is therefore viewed as more safe, and may benefit from the fact that it is marketed as a Red Sea rather than an Israeli resort.

"People often go there without realising what country it is in," according to Melvin Gold, managing director of PKF's hotel consultancy services.

Elsewhere in PKF's survey of 19 Middle East and African cities, both Johannesburg and Cape Town come out particularly poorly, but this is largely due to the tumbling value of the South African rand. In Johannesburg, for example, the average achieved room rate is down 39% when measured in US dollars (the currency used in the survey) but up 5% in rand.

The only cities in the survey to increase bedroom yield were Muscat, Oman; Manama, Bahrain; and Abu Dhabi. Abu Dhabi and Dubai both had the best occupancy, at 70%, a figure particularly noteworthy in Dubai because it was achieved despite the large number of new hotel openings. Dubai also managed to be third in the bedroom yield ratings, at more than $70 (£45.50).

Kuwait was top in average achieved bedroom rate and bedroom yield, but this was because rates are controlled by the government in Kuwait. Each hotel is compelled to charge a specified rate according to its standard, which results in lower occupancies with higher room rates.

by David Harris

Source: Caterer & Hotelkeeper magazine, 4 - 10 July 2002