The majority of the hospitality market across MENA witnessed a decrease in KPIs in January 2017
9 March 2017
Commenting on the January 2017 MENA Hotel Benchmark Survey Report, Yousef Wahbah, MENA Head of Transaction Real Estate at EY said:
“Overall, the majority of the hospitality market across the Middle East witnessed a decrease in KPIs in January 2017 when compared to the same month last year. In the GCC, all markets except Kuwait recorded lower revenue per average room (RevPAR), reflecting the slowdown in performance witnessed across the wider MENA region.
Dubai’s hospitality market emerged as the top MENA performer in January 2017, representing the highest occupancy at 85.7% and highest RevPAR of USD 246, over three times the average RevPAR recorded in other MENA cities. Dubai beach hotels had the highest RevPAR of USD 343, while city-based hotels in Dubai recorded the highest occupancy at 87.6%. Despite the influx of new hotels, Dubai has managed to sustain extremely high occupancy levels year on year. However, average room rates and RevPAR dropped 8.1% and 7.3% percentage points (pp) respectively in January, which could be a result of an oversupply of rooms, encouraging the sector as a whole to lower room rates to remain competitive.
Abu Dhabi’s hospitality market maintained a strong occupancy of 77% in January 2017, but witnessed a decrease in RevPAR and ADR of 11.8% and 10.6% when compared to the period last year.
Cairo’s hospitality market saw an immense growth across all KPIS in January 2017, witnessing the highest growth in RevPAR of 160% at USD 64, up from USD 24 in January 2016, due to higher occupancy and room rates. The city experienced the third highest occupancy rate in the region, behind Dubai and Abu Dhabi increasing by 13.7% percent points from 56.6% in January 2016 to 70.2% in January 2017. The average room rate more than doubled increasing 109.2% from USD 43 in January 2016 to USD 91 in January 2017. The positive performance is predominantly due to the holiday season and the devaluation of the local currency, making it more affordable for tourists and nationals who live abroad. It should be noted that the numbers for Cairo in US$ for 2016 are based on current conversion rates, factoring the devaluation of the currency.
In Saudi Arabia, Riyadh and Jeddah’s hospitality markets witnessed a drop in RevPAR by 22.6% and 27.5% respectively when compared to the same period last year. The drop in Riyadh and Jeddah’s hotel performance may be ascribed to the decreased number of conferences and exhibitions due to corporate spending cuts in both the public and private sectors.
The MENA hospitality market is expected to continue the trend of a softer performance as compared to the previous years on account of the overall macro-economic environment. Furthermore, in select cities, the additional supply expected to enter the market over the year may affect the current room rates and monthly RevPAR when compared to 2016.”