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operation and a healthy revenue stream .
Saudi Arabia numbers are still quite strong and constantly growing , with performance blunted by the massive growth in new hotel supply , as well as the high cost of labor in the Kingdom as it drives out higher quality expat workers and focuses on increasing the percentages of local hires , which , in most cases , is more expensive than expatriates .
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Sales and Marketing Expense
S & M Expenses % of Total Revenue – Jan-June 2024 vs 2023 / 2019 |
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BACK TO LIFE The Middle East was the first region in the world to return to its pre-COVID , hotelperformance levels . This happened in September 2021 , eight months prior to anyone else . Then , around May / June 2022 , the rest of the world began to catch up , all except for the Asia-Pacific region , which took almost a year after that to begin its path of positive recovery .
Meanwhile , the ebb and flow that characterizes Africa is noteworthy : huge highs and major dips over the past 24 months , with the biggest peak appearing in May at 200 % GOP growth over January 2020 , well outperforming its nearest competitor , the Middle East . However , characteristic of its fluid nature , it dropped back substantially in June .
Where , then , is this GOP growth coming from in Africa ? Look at payroll , a major cost factor , but Egypt , the largest market in the continent , showed just 13.7 % payroll cost in 2024 YTD June , while South Africa recorded a well-managed 22 %.
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Total Hotel Payroll %
Payroll % of Total Revenue – Jan-June 2024 vs 2023 / 2019
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Drilling down deeper into rooms division profitability , Egypt is soaring at 88 %. The picture is clearer , but still doesn ’ t fully explain the extraordinary GOP growth across Africa . If it ’ s not South Africa , Egypt or Morocco , who is it ? Sub-Saharan Africa , that ’ s who , where a combination of low energy prices , low cost of labor , small supply additions , strong business travel demand and government-led
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conferences are hiking up the numbers and causing the wide curves in the data . It ’ s quite extraordinary .
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TAKEAWAYS The past 24 months have been marked by a deluge of news about the Middle East ; specifically , mega projects in Saudi Arabia with eye-watering budgets , over-the-top new hotels and even casinos rising out of the sands in the UAE .
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All headline-worthy news , but , while all of this was going on , Africa was hardly talked about , maybe a small four-star business hotel opening every few months , but that ’ s it .
However , as you can see from the numbers , it is by far the best-performing region in the world when it comes to profit margins and , over the next few years , it certainly will be on the radar of hospitality investors .
76 hotelsmag . com September 2024