Middle East hotel performance slows at end of 2008
2009 looks even more challenging
“The Middle East has invested heavily in the tourism sector in recent years and is probably better placed to remain sound during a challenging time than other parts of the world and, with its great product offering, may emerge faster than other regions when there is an improvement in the world economy.”
When looking at full year data, the region achieved the highest occupancy and average room rates in the world. Middle East revPAR rose 18.3 percent to US$148, a notable US$44 ahead of the next best performing region, Europe. Much of this growth was driven by average room rates, up 17.0 percent to US$215. Meanwhile occupancy increased by 1.2 to 68.8 percent while all other regions apart from South America (up 1.7 percent) experienced drops in occupancy.
Beirut achieved the strongest growth in 2008 reporting a staggering 101.1 percent leap in revPAR to US$95. The city saw strong growth last year as it bounced back after suffering from political tensions with Israel in 2006 and 2007.
In the United Arab Emirates (UAE), Dubai and Abu Dhabi continue to share the league table for the highest occupancy, average room rates and revPAR in the region. Even though revPAR in Dubai only grew 0.8 percent in 2008, the emirate still holds the title for the highest average room rates and revPAR at US$300 and US$237 respectively. On the flip side, revPAR growth in Abu Dhabi is soaring and saw a 46.0 percent rise in 2008 to US$230. Occupancy increased 8.9 percent to 81.5 percent - one of the highest in the Middle East.
Commenting, Alex Kyriakidis, Global Managing Partner of Tourism, Hospitality & Leisure at Deloitte said: “Hotels across the Middle East performed well in 2008. However, maintaining this growth in 2009 is going to be difficult.
“The first challenge facing Middle East hoteliers is the economic crisis in Europe. With European economies in recession and house values declining, consumer confidence – the key measure of travel demand – is in negative territory with little prospect of it reversing before the end of 2009. 45 percent of hotel room bookings in the UAE come from European visitors and 15 percent from the UK, so this fall-out has a significant impact on UAE hotel bookings.
“The second challenge is that for the UK traveller, the UAE has become 30 percent more expensive over the past three months as a result of the strengthening US dollar (UAE currency is dollar pegged) so the UK pound has gone from AED 7.5 to AED 5. This makes Dubai very expensive from the UK traveller perspective.
“The combination of the above, coupled with the drop in construction and other capital project activity has meant that both the leisure and business travel sectors are down. I cannot see an improvement until consumer confidence returns in the feeder countries.
“Recent tourism developments in the region have been heavily dependent on real estate residential developments. New developments will need to focus sharply on the tourism product itself, its viability and its profitability as a tourism product.”
Middle East city performance – year-to-December 2008
Source: STR Global
Note: All analysis in US$.
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