I left Dubai at the end of 2009 when the whole United Arab Emirates region started to feel the effect of the global financial crisis. Real estate developments started to be put on hold or simply were canceled.
Fast forward to today when I’m nearly drowning amid the buzz of activity surrounding me as I try to write from the heart of the Dubai International Financial Centre.
One of the most apparent observations—in addition to the new profiles dotting the city’s skyline—is the fact that Dubai seems to have continued its major infrastructure work during the down cycle, including the completion of the metro. That diligent approach has proven important as the city surfs the recovery wave and welcomes a swell of inbound travelers, including a record 10 million-plus during 2012.
The increase in demand has had a positive impact on hotel performance. During 2012, occupancy was up 2.9% to 77% in the emirate, while average daily rate in dirham terms was up 7.7%, according to STR Global, sister company of HotelNewsNow.com.
In other key markets throughout the Gulf Cooperation Council, however, hoteliers have not been as lucky.
Doha’s 10.5% decrease in revenue per available room in Qatar riyal terms during 2012 is attributable mainly to the market’s 7.6% drop in occupancy to 56.2%, according to STR Global. The market was negatively impacted by a 32% increase in new supply, according to DTZ’s Property Time report, which put some pressure on prices and occupancy.
Hoteliers should not expect relief any time soon. Doha, which will host the Fédération Internationale de Football Association World Cup, will see an additional 50 hotels and 45,000 rooms by 2020 concentrated in the top end of the market, according to a report in Hotelier Middle East.
In the first month of the year, RevPAR in Doha decreased by 0.1%. This decline was mainly the result of a 5.7% decrease in ADR; occupancy was up 5.9% year on year to 62.2%, according to STR Global.
With significant milestones ahead—which include the opening of the new airport, the completion of infrastructure development and the continuous growth of Qatar Airways as one of the global players (announced to join One World Alliance last October)—Doha is expected to see an increase in visitors arrivals alongside the increase of new hotels.
The Economist Intelligence Unit forecasts Qatar to generate gross-domestic-product growth of 5.8% during 2013, and to continue to grow annually by 6.3% until 2020.
Riyadh, Saudi Arabia
Riyadh saw occupancy contract by 6.6% to 56.6% during 2012. During the same period, RevPAR declined 9.4% to 555.07 Saudi riyals ($148.01) and ADR decreased by 3% to 980.57 riyals ($261.48), according to STR Global.
However, results from January 2013 indicate a rebound, with occupancy up 0.6%, ADR up 4.4% and RevPAR up 5% compared with January 2012, according to STR Global. Hoteliers and the major hotel players in the capital certainly will monitor hotel performance as the year unfolds and a number of new hotel projects open.
For instance, Hilton Worldwide has four hotels under development in Riyadh. The group’s latest announcement for the 214-room Hilton Riyadh King Fahd Road, which is expected to open in 2014, follows three others due to open in Riyadh during 2013. Hilton will have 10 properties in operation in Saudi Arabia by 2014.
Accor and Al Hokair Group recently opened the Suite Novotel in Riyadh as part of a franchise agreement. “The GCC is one of the main focuses for Accor and its development strategy,” Olivier Granet, VP of development for Accor Middle East, told me. “For our partners in the region, Accor hotels provide a wide range of brands led by our flagship Sofitel brand in the luxury segment. We have also seen a fantastic interest and growth opportunities for our midscale and budget brands, particularly in Saudi Arabia.”
The EIU forecasts real GDP growth of 4.8% through 2020 for Saudi Arabia.
United Arab Emirates
Yet another sign that the emirates are shining globally and are being seen as an attractive place to conduct business is Starwood Hotels & Resorts Worldwide’s executive immersion exercise, in which the company’s headquarters temporarily relocated from Stamford, Connecticut, in the U.S. to Dubai. Starwood is expected to increase its brand footprint to 130 hotels in Middle East/Africa region by 2017, including no fewer than 30 properties in the United Arab Emirates alone.
As reported above, Dubai recorded strong numbers during 2012, including a 10.8% increase in RevPAR in dirham terms. During the first month of 2013, continued strength in both occupancy and ADR fueled a 9.5% RevPAR gain, according to STR Global.
Meanwhile in Abu Dhabi, RevPAR during 2012 decreased 11.7% in dirham terms, dragged down by a 6.6% drop in ADR and a 5.5% fall in occupancy, according to STR Global. The emirate saw a number of prominent projects open during 2012, among them the 222-room Anantara Eastern Mangroves Hotel & Spa. And Ritz-Carlton earlier this month opened a 532-room hotel—the group’s first in the emirate.
The emirates are expecting to see real GDP growth of 4.7% through 2020, according to the EIU.
The Arabian Travel Market in May will be another fantastic opportunity to take the pulse of the hotel market. By then we should have first-quarter performance data as well as a better perspective on the economic and political outlook in the GCC and around the world.
The opinions expressed in this blog do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
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