Hajj season boosts Middle East hotel demand in August

Hajj season boosts Middle East hotel demand in August
Manama skyline: The hotel sector has been under pressure due partly to the impact of low oil prices and geopolitical risks. (Shutterstock)
Updated 24 September 2018

Hajj season boosts Middle East hotel demand in August

Hajj season boosts Middle East hotel demand in August
  • Occupancy rates — a measure of the proportion of available rooms sold — in the region jumped to 63.4 percent from 62.1 percent
  • The average daily room rate — another key industry metric — increased 12.2 percent to reach close to $170 per night

LONDON: Demand for hotel rooms across the Middle East leapt last month providing welcome relief for an industry that has been grappling with an oversupply of hotel accommodation, new data showed.
Occupancy rates — a measure of the proportion of available rooms sold — in the region jumped to 63.4 percent from 62.1 percent, according to data provider STR’s research published on Sept. 24.
The average daily room rate — another key industry metric — increased 12.2 percent to reach close to $170 per night, while revenue per available room (RevPar) increased by 14.5 percent to reach $107.50.
The region’s hotel sector has been under pressure due partly to the impact of low oil prices and geopolitical risks, resulting in a slump in room revenue and occupancy as supply exceeded demand.
“It is true in the broader sense that we have been seeing a softening of market-wide RevPar levels in the hospitality sector across most major cities within the GCC countries,” said Ali Manzoor, partner, hospitality and leisure at property consultancy firm Knight Frank.
Analysts have blamed the year-on-year uptick in August on the earlier Hajj season and Eid Al-Adha holiday, rather than indicative of a change in outlook for the sector.
“The spike in occupancy levels in August was largely attributable to differences between the Gregorian and Hijri calendars,” Manzoor said.
This year, the pilgrimage period took place in August, helping to boost the industry’s performance that month. “It is therefore reasonable to expect hotels to underperform in the month of September in relation to last year,” he said.
Looking at data for the year-to-date, the UAE retains the highest occupancy rate in the Gulf region at 72.2 percent, though this represents a slight decline of 0.8 percent compared to the same time period last year, according to STR data.
Saudi Arabia’s occupancy levels stood at 58.1 percent year-to-date, marginally up by 0.2 percent on last year.


Intel avoids outsourcing embrace, investigates hack of results

Intel avoids outsourcing embrace, investigates hack of results
Updated 38 min 42 sec ago

Intel avoids outsourcing embrace, investigates hack of results

Intel avoids outsourcing embrace, investigates hack of results

The incoming chief executive of Intel Corp. said on Thursday that most of the company’s 2023 products will be made in Intel factories but he sketched a dual-track future in which it will lean more heavily on outside factories.
The lack of a strong embrace of outsourcing from new CEO Pat Gelsinger drove shares down 4.7% after hours. Shares rose 6.5% during regular trade, when the results were released ahead of the close. The company said it was investigating “non-authorized” access to some of the results, with the Financial Times quoting its chief financial officer as saying the microchip maker had been hacked.
Intel also forecast first-quarter revenue and profit above Wall Street expectations, continuing to benefit from pandemic demand for laptops and PCs that have powered the shift to working and playing from home.
Gelsinger said he was “confident that the majority of our 2023 products will be manufactured internally” though he also said the use of outside chip factories is likely to increase “for certain technologies and products.”
Intel has been considering since last July whether to drop its decades-old strategy of both designing and making chips by turning for help on its central processing units, or CPUS, to “foundry” manufacturers. Those partners could be Taiwan Semiconductor Manufacturing Co. and Samsung Electronics. Intel’s manufacturing technology, called a 7-nanometer process, is expected in 2023.
“We didn’t get our answer on which foundries and when,” said Patrick Moorhead of Moor Insights & Strategy. “They pushed the can down the road.”
Kinngai Chan, analyst at Summit Insights Group, said Intel is not likely to outsource its flagship chips.
“Intel’s 14-nanometer chip transistor speed has always been faster than what any foundry can offer even at 7-nanometer,” Chan said. “We believe it will increase its use of external foundries over-time — just not for its large-core CPUs.”
Keeping manufacturing in-house means higher investments. Bernstein analyst Stacy Rasgon questioned whether Gelsinger, currently the chief executive of VMware Inc. who previously spent 30 years at Intel and announced his intention to return just last week, has had sufficient time to dig into the issue.
“It was pretty obvious they were trying to borrow his credibility” when Gelsinger endorsed Intel’s delayed 7-naonmeter technology, Rasgon said.
Intel’s decision coincides with US lawmakers having passed bipartisan legislation to fund US chip manufacturing. But the new law has yet to specify funding levels or recipients, and Forrester Research analyst Glenn O’Donnell said Intel might take the opportunity to solicit US government support for domestic manufacturing.
Boosted by a new high-end PC processor, Intel regained some momentum in the PC market, with volumes of PC chips rising 33%, faster than the 26% rise for the overall PC market, according to data from IDC.
Data center group sales, which powered Intel’s growth over the past several years, were $6.1 billion compared with analyst estimates of $5.48 billion, according to FactSet data.
But sales to cloud computing customers, some of the largest and fastest-growing purchasers of data center chips, were down 15% in the fourth quarter. Data center chip operating margins were 34% in the quarter, down from 48% a year earlier.
“We think (data center) operating margins are going to improve as we get toward the second half of the year, when we expect to see a rebound in cloud” chip sales, Intel Chief Financial Officer George Davis said.
The company also raised its dividend by 5%.
The chipmaker said it expects fiscal first-quarter adjusted sales of $17.5 billion and adjusted earnings per share of $1.10, both ahead of analyst consensus, according to IBES data from Refinitiv.
Fourth-quarter revenue of $20 billion and adjusted earnings per share of $1.52 also beat Wall Street targets.