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Dubai, Saudi hotels lead region

Tuesday, Feb 14, 2012

Dubai: Hotels in Dubai and Saudi Arabia outperformed other markets in the Middle East last year as they continued to improve revenues, occupancies and room rates, according to the Ernst & Young (E&Y) Middle East Hotel Benchmark Survey.

"Dubai and Saudi hotels have held their own and continue to improve their RevPar [revenue per available room, an industry benchmark], occupancy and room rates," Yousuf Wahbah, Partner and Head of Mena Transaction Real Estate, E&Y, told Gulf News.

Pointing to December 2011 performance, he said that the star performer of the month was Makkah where RevPar on a monthly basis grew 47.8 per cent.

Asked if the strong performance will continue in 2012, Wahbah said: "It is uncertain that the rise can be sustained as more hotels are expected to come on board this year, easing shortage in demand and stabilising RevPar even with increased visitor numbers."

He added that the possibility of the figures reaching a plateau or perhaps sliding down is likely, "given that most of Mena's new hotels are expected to be in Dubai, Riyadh and Makkah".

Dubai became a market leader with hotels recording the highest occupancy levels of 78 per cent in the period January to December 2011, according to the E&Y study, with Abu Dhabi hotels closely following with occupancies of 75 per cent.

With regard to room yield or RevPar, Makkah hotels topped the list at $207 (Dh760) in 2011, followed by Dubai hotels at $174.

However, Dubai beach hotels recorded the highest RevPar in the region at $255.

Abu Dhabi hotels, on the other hand, experienced a decline of 6.6 per cent in revenues to $155 during the year.

"This was an effect of new incoming supply," Wahbah said.

He said: "In 2011 the Dubai hotel sector showed very good results, especially in the first nine months. As for Abu Dhabi hotels, they saw record guest numbers in 2011."

Increasing tourism

Asked about the revenue projections for UAE hotels in 2012, Wahbah told Gulf News: "With increasing international tourism and Emirates' continuing growing network and improving load factor, it is anticipated that RevPars would continue to grow in Dubai in 2012. We also need to factor in some large hotels coming online in 2012 which may put pressure on the growth rate. On the other hand, we expect the RevPar for Abu Dhabi hotels to be stable or show limited growth during 2012."

Performance of hotels in Cairo, however, continued to decline through last year in terms of occupancies and revenues because they were impacted by the Arab Spring. Hotels in Cairo recorded the lowest room yield of $39 through 2011 and even smaller revenue at $29 in December, according to E&Y data.

Bahrain was yet another market that suffered during the year due to geo-political tensions. Hotels in Manama earned a meagre $73 last year, and as little as $61 in December.

Muscat hotels, meanwhile, enjoyed strong occupancy in December at 80 per cent, below Dubai which led with 83 per cent.

"Besides the expected steep declines in the markets of Egypt and Bahrain, others that showed falls in RevPar at the end of 2011 include Beirut, Abu Dhabi and Muscat," says Wahbah.

"These drops are seen both in year-to-date and monthly comparisons, which means that room rates in these markets are still looking to bottom out to become more attractive to visitors. At the same time, they need to reassess and revitalise their offering as business and leisure destinations and increase their focus on tapping new markets."

Amman and Doha, meanwhile, showed a slight improvement in RevPar in December compared with the previous month, according to the E&Y statistics, but declined on year-to-date indicating relative stability, said Wahbah.

Cross marketing

Looking at the outlook for the growth of UAE and Middle East hotels in 2012, Wahbah said: "The 2012 performance will depend on a number of factors, for example, the opening of new hotels.

"Other growth factors will include the expansion of airlines operating in the UAE and the Middle East, in addition to airlines such as Emirates and Etihad Airways expanding their routes."

He added: "It is also worth mentioning that the cross-network marketing undertaken by new hospitality brands can help with augmenting or encouraging greater occupancy levels."

By Shweta Jain, Senior Reporter

© Gulf News 2012. All rights reserved.