Have Middle East hotels learned new ways to attract travellers?
Given the reports pouring in from different quarters regarding the falling hotel average room rate (ADR) and RevPAR, you probably thought it was all over for Middle East hotels, right? Wrong.
One may not have thought about it, but the hotel and hospitality industry in the Middle East has been on the road to recovery if the latest statistics about the Q1 performance is any indication.
The Middle East hospitality market witnessed a steady growth in occupancy during the first quarter of 2018, according to the latest EY Middle East Hotel Benchmark Survey Report.
Except for Jeddah, Beirut, and Doha, hotel occupancy across the MENA region saw an increase when compared to the first quarter of 2017.
This increase was primarily due to a number of shopping festivals, improving bilateral relations, and overall pleasant climate conditions across the region.
“The performance across the MENA region in Q1 2018 saw a steady growth influenced by positive factors such as countries like the UAE, KSA and Bahrain improving their international trade relations,” Yousef Wahbah, MENA Real Estate, Hospitality and Construction Sector Leader, says.
Top MENA hospitality performer
In the first quarter of 2018, Dubai achieved the highest occupancy, average room rate (ADR) and RevPAR across the MENA region.
The city’s occupancy reached 86.9% with an ADR of USD$293, which led to an overall RevPAR of USD$255 in Q1 2018.
In the United Arab Emirates, the hospitality market saw a slight increase in occupancy in Q1 2018 over Q1 2017.
Occupancy in Dubai increased by 0.8% points from 86.1% in Q1 2017 to 86.9% in Q1 2018, possibly due to international visitors of the 23rd edition of the Dubai Shopping Festival as well the favorable weather.
Even though there was a slight decline in ADR by 1.2% from US$297 in Q1 2017 to US$293 in Q1 2018, Dubai achieved the highest RevPAR in the region at US$255 in Q1 2018, the same as last year.
Driving the overall hospitality KPIs for Dubai were the hotels located on the beach, which saw an increase across occupancy, average room rate and RevPAR in Q1 2018.
In the first quarter of this year, the occupancy of beachfront hotels in Dubai reached 82.7% with an average room rate of US$559, leading to a RevPAR of US$462.
Meanwhile, hotels in the city of Dubai saw a slight increase in occupancy with 88.7%, but RevPAR fell by 6.2% to US$168 in Q1 2018 due to a 6.8% decline in the average room rate.
Occupancy increases across GCC markets
In Saudi Arabia, Madinah, Riyadh and Makkah witnessed an increase in occupancy; however, Jeddah witnessed a decrease of 5.7% points from 54.4% in Q1 2017 to 48.7% in Q1 2018.
The hospitality market in Jeddah also witnessed a decrease in ADR by 5% from US$197 in Q1 2017 to US$187 in the same period of this year.
The Riyadh hospitality market witnessed growth across all KPIs with its occupancy increasing by 3.9% points from 57% in Q1 2018 to 60.9% in the same period this year.
In Bahrain, the Manama market saw a 10.6% points increase in occupancy to 59.7% in Q1 2018 from 49.1% in Q1 2017.
However, the ADR decreased by 6.2% from US$187 in 2017 to US$176 in Q1 2018.
The Kuwait hospitality market saw a 2.5% points increase in occupancy from 65.1% in Q1 2017 to 67.5% in Q1 2018.
The market also witnessed a 4.5% increase in ADR from US$191 in Q1 2017 to US$200 in Q1 2018.
These contributed to the overall increase in RevPAR by 8.5% from US$124 in Q1 2017 to US$135 in Q1 2018.
In Oman, the Muscat hospitality market also registered an increase across all KPIs. Occupancy increased by 1.1% points from 83.3% in Q1 2017 to 84.4% in Q1 2018 and ADR witnessed a 3.9% increase from US$169 in Q1 2017 to US$175 in the same period of this year.
Going forward, as Wahbah says, “As events wind down in the second quarter of the year because of the start of the holy month of Ramadan and the summer season, we can expect a decline in occupancy across most of the GCC hospitality markets.”