Hotel development in the Middle East is ramping up as investors begin to see opportunity in the region again, according to the Q4 2022 Middle East Construction Pipeline Trend Report from Lodging Econometrics (LE).

The report said New Project Announcements (NPA) in the region continued to trend upward throughout 2022 closing fourth quarter 2022 with 67 new projects housing 19,837 rooms, an increase of 56 percent year-on-year (YoY).

The fourth quarter also witnessed 33 new hotels accounting for 6,452 rooms open in the region. Overall, 2022 saw a record number of hotels openings with 81 hotels accounting for 17,736 rooms.

The LE forecast for new hotel openings in 2023 is 123 new hotels/30,113 rooms while 116 new hotels/29,085 rooms are forecasted to open in 2024.

Construction pipeline

At the close of the fourth quarter, the hotel construction pipeline stood at 549 projects accounting for 143,637 rooms. Projects under construction stood at 304 projects/86,440 rooms. Projects scheduled to start construction in the next 12 months are at 103 projects/27,325 rooms, up 20 percent and 19 percent respectively YoY.

Projects in the early planning stage are at 142 projects/29,872 rooms, with a 15 percent YoY increase in terms of hotels and a 21 percent YoY increase by rooms.

Countries in the Middle East with the greatest number of projects in the construction pipeline at the close of fourth quarter were Saudi Arabia (243 projects/67,618 rooms) followed by the United Arab Emirates (UAE) with 104 projects/29,210 rooms. Egypt came third with record high project and room counts of 87 projects/21,672 rooms.

The top three cities in the Middle East, with the largest hotel construction pipelines during the fourth quarter are located in Saudi Arabia - Provincial with 96 projects/23,182 rooms; Riyadh with project and room counts of 73 projects/14,770 rooms; and Jeddah with 46 projects/10,179 rooms. The fourth and fifth positions went to Doha, Qatar, with 42 projects/10,091 rooms, and Cairo, Egypt with 31 projects/6,638 rooms respectively.

In the Middle East, 52 percent of the projects and 45 percent of the rooms in the construction pipeline were in these five cities, the LE report said.

Top hotel brands

At the end of 2022, Hilton had the most projects in the pipeline in the Middle East, with a record 99 projects/25,353 rooms. Next is Marriott International with 77 projects/22,884 rooms, Accor with 74 projects/19,553 rooms, InterContinental Hotels Group (IHG) with 63 projects/15,143 rooms, and Rotana Hotels, Inns & Suites with 17 projects/5,172 rooms.

The leading pipeline brands for these companies are Doubletree by Hilton with 28 projects/6,693 rooms and Hilton’s Garden Inn brand with 18 projects/5,826 rooms; Marriott’s Courtyard brand with 14 projects/3,735 rooms and Marriott Hotel with 7 projects/2,445 rooms; IHG’s InterContinental brand with record-high project counts of 15 projects/3,920 rooms and Hotel Indigo with 12 projects/2,552 rooms; Accor’s Novotel with 10 projects/2,528 rooms and Movenpick with 9 projects/2,181 rooms; Rotana Hotels, Inns & Suites’ Rotana brand with 6 projects/1,919 rooms and Rayhaan with Hotel & Resort 5 projects/1,358 rooms.

(Writing by SA Kader; Editing by Anoop Menon)