Government aid, as well as new, temporary uses for hotels are providing glimmers of hope for the hotel industry in the Middle East and Africa as the world copes with the effects of the coronavirus pandemic.
LONDON and DUBAI—Hotel occupancy has dropped dramatically in markets throughout the Middle East and Africa in response to pandemic fears and restrictions on travel, but performance results also bore a few surprises, which likely were the result of government intervention, sources said.
During a webinar hosted by STR, the parent company of Hotel News Now, Philip Wooller, area director for the Middle East and Africa at STR, said hotel performance in the region has been “getting significantly worse … (and) the next three weeks will be pivotal.”
Occupancy at the majority of hotels in the region has dropped below 30%, he noted.
All three key performance metrics were down in nearly every market, but hotels in Doha, Qatar, still held onto some occupancy (down approximately 30%) and managed to push rate a bit, Wooller said.
“Doha is quite an interesting case. We have 100% of hotels in Qatar (submitting data to STR), so this is an incredibly true picture. Occupancy did not alter much until the end of February, and in terms of average daily rate, we have seen a little spike,” he said.
Wooller said ADR of above 400 Qatari rial ($109.86) might be possible because of a change of use for hotels in Doha.
“That is still quite a high number … (and) an achievement compared with other cities,” he said.
Wooller said Jeddah hotels have posted relatively remarkable performance.
“It might be the only city in the world growing ADR and revenue per available room. It has grown room rate for, I think, the last 10 days,” he said, adding this might be due to the Saudi Arabian government booking rooms. Usually at this time of year, the Saudi government moves from capital Riyadh to Jeddah.
The same positivity cannot be said for Saudi Arabia’s two holy cities, Makkah and Medina, which are effectively closed down, Wooller said.
“The Holy Cities (are) probably the hardest-hit cities in the world, and now (are) at an all-time low in occupancy,” he said, adding that Umrah visas needed by Muslim pilgrims to visit for hajj were suspended on 27 February.
Wooller drilled in on some specific markets.
Beirut’s occupancy, he said, fell 92%, but the Lebanese capital was “having some pretty notable problems before coronavirus.”
Muscat’s ADR has somewhat held up, he added, showing a 25.4% year-over-year decline in the third week of March to 48 Omani rial ($124.67), but RevPAR has suffered, dropping over the same period by 83.4% to OMR8 ($20.78).
Kuwait over the same period maintained ADR somewhat, despite an 87.7%, drop in occupancy to 8%, with rate down only 13.1% to 56 Kuwaiti dinar ($177.54). RevPAR over that period fell 89.3% to KWD4 ($12.68).
“We’re in uncharted territories. … Hotels have had no choice but to start closing. It says something when a company such as Hilton has never had to close a hotel for anything other than a refurbishment in 100 years,” said Robin Rossmann, managing director at STR.
United Arab Emirates
Dubai hotel occupancy, which was up 20% at the start of 2020, dropped 75% over the next two months, said Sarah Duignan, director of client relationships at STR.
With the emirate preparing to open Expo2020 in September, the virus comes at a very bad time.
Occupancy for the week ending 21 March stood at 31%, with expats on staycation perhaps shoring up some of the higher-end hotels, especially in Jumeirah Palm & Beaches, one of nine STR submarkets in Dubai.
According to Duignan, Dubai ADR was down 26.7% year-over-year to 455 United Arab Emirates dirham ($123.88), while RevPAR dropped 72.2% to AED146 ($39.75), for the same week.
Dubai’s suspending of all flights on 25 March is expected to further hit hotel performance.
Abu Dhabi, the other major UAE market, is trending ahead of Dubai for the first time in a decade, Duignan said.
For the week ending 21 March, Abu Dhabi posted a 35.4% decline in occupancy to 54%, perhaps partially as a result of the emirate quarantining passengers disembarking from its state carrier Etihad.
Abu Dhabi’s ADR and RevPAR fell in the period by 43.4% and 63.4%, respectively.
Africa hotel markets are also feeling the effects of the pandemic.
Kostas Nikolaidis, an STR executive overseeing the Middle East, Africa and Greece region, said Africa “has gone from OK, with a question mark, to bad, to worse, with perhaps the worst still to come.”
He said that RevPAR declines are mirroring the drop in occupancy, which in most destinations is less than 40%.
Seychelles hotel occupancy has been among the least-impacted, with a 32% drop, he said.
“The (Indian Ocean) islands are leisure, long-haul markets, so different from most, but we’ve seen The Maldives dropping to declines of almost 80%,” he added.
Major markets in North Africa such as Cairo and Marrakech had reported flat occupancy in February, with hotels in both destinations now are less than 10% occupied, he said.
Nairobi, one of Africa’s key event markets, has declined likewise, Nikolaidis said.
“As the pandemic moves, this can very quickly change,” he said.
Hotels in Cape Town, where domestic travel demand is typically high, are also likely to soon feel the impact.
“(Domestic demand) helped very nicely in February and through the first week of March … but a lockdown begins from this week,” Nikolaidis said.