Low hotel revenues hurt profits

01/05/2010 00:00 AST

The National Corporation of Tourism and Hotels (NCTH), which owns properties including the InterContinental Abu Dhabi, has blamed lower revenues for a 17.61 per cent fall in first-quarter profits.

The Abu Dhabi company said yesterday net profit came in at Dh39.76 million (US$10.8m) in the first quarter of this year, down from Dh48.26m in the same period last year.

"This decline in the net profit can be attributed to the decrease in total revenues from the hotel division," said Mohammed Mounib, the chief executive of NCTH.

The corporation said net revenues decreased by 5.96 per cent to Dh9.07m because of lower occupancy levels, a decrease in room rates and "a reduction in total business volume this year".

A rise in income in some of its non-hotel ventures and reduced finance costs had helped stem the decline, Mr Mounib said.

Among its interests, NCTH owns Al Ain InterContinental hotel and owns and operates the Al Dhafra Beach hotel.

It also has a 50 per cent stake in the National Transportation Company, which owns and operates taxis and buses.

It is also a joint partner in the Nareel Island Development Company, which is managing and developing a mixed-use residential and resort complex on Nareel Island in Abu Dhabi.

Hotels in Abu Dhabi have seen a decline in occupancies and rates as more properties have opened, causing increased competition for guests. This is pushing hotels into a price war.

Room rates in the capital last month fell 27.7 per cent to $228 compared with March last year. Occupancy levels were down 24.2 per cent at 64 per cent, according to data from STR Global, a London-based research firm.

The Abu Dhabi Tourism Authority on Monday said total hotel guest revenues in the emirate fell 5 per cent in the first quarter, compared with the same period last year, to Dh1.15 billion.

But the total guest numbers, which are being shared by a greater number of hotels, were up.

The data showed 462,173 guests stayed in Abu Dhabi's 116 hotels and hotel apartments in the first three months of the year, a 19 per cent rise on the period last year.

The National