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Global hotel pulse: Middle East/Africa news
October 4 2011

In this week’s roundup of news from the Middle East/Africa region: South Africa faces a FIFA World Cup hotel supply hangover; private equity funds seek strategic buyers; and opening and development news from across the region.

Highlights
  • The MEA region reported mixed results in the three key operating metrics during August, according to STR Global.
  • There are still 1,000 rooms yet to open in South Africa, STR Global reports.
  • Dubai’s hotel sector has received a lift from the city-state’s reputation as being a “safe haven” from the political turmoil that has rocked the Middle East/Africa region this year, according to Jones Lang LaSalle.

HotelNewsNow.com each week features a news roundup from a different region of the world. Today’s review covers Middle East/Africa.

STR Global: MEA August hotel results
The Middle East/Africa region reported mixed results in the three key performance metrics during August 2011 when reported in U.S. dollars, according to data compiled by STR Global.

The region ended the month with a 9.5% decrease in occupancy to 48.3%, a 12.9% rise in average daily rate to US$149.65, and a 2.2% increase in revenue per available room to US$72.31.

“The holy month of Ramadan fell together with the month of August this year, reducing demand across the region,” Elizabeth Randall, managing director of STR Global, said in a news release. “This, in addition to the consequences following the Arab Spring, impacted this month’s results. Average room rates grew across the regions with the only reported declines across Northern Africa.”

MEA supply outlook
The Middle East/Africa hotel development pipeline comprises 463 hotels totaling 126,090 rooms, according to the August 2011 STR Global Construction Pipeline Report.

Among the countries in the region, Abu Dhabi, United Arab Emirates, ended the month with the largest expected room growth (+90.3%) if all 13,534 rooms in the total active pipeline open. Other countries to report significant expected room growth: Riyadh, Saudi Arabia (+87.6% with 5,531 rooms); Dubai, (+44.6% with 26,642 rooms); Jeddah, Saudi Arabia (+44.6% with 2,733 rooms); and Muscat, Oman (+37.5% with 6,049 rooms).

South Africa faces oversupply
Hosting the FIFA World Cup in June and July last year gave South Africa the opportunity to showcase itself to the rest of the world. Many new hotels were opened to cope with the spectators, country delegations, media, etc., and a year later the influence of this overbuilding is impacting hotel performance, according to data from STR Global

Oversupply is a limitation facing hoteliers in South Africa as hotel performance has decreased during 2011. In anticipation of the event, guestroom supply rose by 5.7% every year from the end of 2008 to year-end 2010 on a compound annual growth rate basis. By June 2010, there were more than 68,000 daily rooms available, a level of supply that totally overwhelmed demand even during the tournament. Compounding the problem, the STR Global pipeline report for July 2011 records almost 1,000 new rooms under development and still to enter the market.

MiddleEastAfrica Ad Will Appear Here

Strategic buyers sought by Middle East private equity
Private equity funds in the Middle East are increasingly turning to strategic buyers such as sovereign wealth funds in an effort to exit their investments, Reuters reports.

“Sales to sovereign wealth funds, who are increasingly allocating more to direct investments or to a strategic buyer, is the clearest route available. It is, in fact, the only choice (private equity) funds have,” said Antoine Drean, chairman of Triago, a company that helps private equity firms raise capital.

JLL: Dubai a ‘safe haven’
Dubai’s hotel sector has gotten a lift from the city-state’s “safe haven” status achieved during the Arab Spring protests this year, according to a Jones Lang LaSalle report.

The city-state’s reputation as a safe haven has resulted in more tourist arrivals, which has benefitted the region’s hotel sector. Occupancy, average daily rate and revenue per available are all up, Jones Lang LaSalle noted, though the levels are below Dubai’s 2008 peaks.

In more positive news for hotels, Dubai’s real gross domestic product is forecast to increase by 5.2% year-over-year.

Marriott names new head of MEA division
Marriott International has tapped Deloitte’s Alex Kyriakidis to head its Middle East/Africa division. Kyriakidis, formerly Deloitte’s global managing director for Tourism, Hospitality & Leisure, will be based in Dubai. 

Read "Marriott’s incoming MEA head sees growth."

With 33 hotels in 10 countries, Marriott’s MEA division is poised for major growth: Approximately 40 hotels are in Marriott’s hotel development pipeline in the region, and plans include significant new development in sub-Saharan African markets. Kyriakidis will oversee all aspects of the division’s business activities, including operations, sales and marketing, finance and hotel development.

Openings, deals, development
• Marriott
has opened the 204-room Renaissance Tlemcen Hotel in Tlemcen, Algeria.
• A Qatari sovereign wealth fund is considering buying the 192-room W London Leicester Square for £200 million (US$310.54 million), The Times newspaper reports.
• Accor’s development plans for Morocco include the addition of the Sofitel, Ibis, Ibis Budget and Novotel brands. In Morocco, 90% of the company’s growth plan will come from new hotels.
• The 250-room Mafraq Hotel Abu Dhabi is scheduled to open in November after a two-year renovation project.
• The Ghion Hotel in Ethiopia is on the market, Ezega.com reports

• The 10-room boutique Le Dix hotel has opened in Beirut, according to Hotelier Middle East.

Compiled by Shawn A. Turner.

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