The Middle East is in a more fortunate position than much of the rest of the world when it comes to hotel room occupancy, despite current figures being lower than in previous years, said Robert O’Hanlon of Deloitte, who announced the findings of its report – The Middle East Hotel Performance Review – at Arabian Travel Market 2009. In an analysis of regional trends in hotel performance and profitability, O’Hanlon explained the Middle East was showing a projected two percent rise in international…
The Middle East is in a more fortunate position than much of the rest of the world when it comes to hotel room occupancy, despite current figures being lower than in previous years, said Robert O’Hanlon of Deloitte, who announced the findings of its report – The Middle East Hotel Performance Review – at Arabian Travel Market 2009.
In an analysis of regional trends in hotel performance and profitability, O’Hanlon explained the Middle East was showing a projected two percent rise in international tourist arrivals which compared favourably with a global reduction of two percent.
“It just shows what a good position we are in,” he explained. Using data supplied by STR Global, a business partner of Deloitte, he showed that Middle East RevPAR (revenue per available room) – a key measure of hotel performance – was recording rates of US$148 against Europe’s US$96 and North America’s US$68. “RevPAR is an excellent way of determining the sentiment and turning points to assess the direction of the overall market,” he said. “The shape of the curve is absolutely critical in showing the timings of when the markets turn into negative or positive growth.
“So, when profiling Dubai against other cities, it closely matches New York in recent years; but if you look at the curve of the graph for Riyadh it is still increasing and showing strong growth, which is forecasted to continue increasing for the first quarter of this year. And this growth is reflected in other cities across the Kingdom, reflecting the government’s willingness to support the travel industry and the increasing appetite of Saudis themselves to travel within their country; and not just to the top-end five-star hotels, but also the mid-level market too,” said O’Hanlon, who is one of 30 industry chiefs participating in Arabian Travel Market 2009’s expanded seminar programme.
“Across the Middle East, the seasonally adjusted figures show an increase in RevPAR of 7.7 percent at the end of March 2009 compared with a year ago, reflecting both the occupancy rate and the rate that can be charged for the room. There is stress in occupancies, but growth on the revenue side. Compare that with a number of European gateway cities and the graph goes negative. So in this region we have a number of areas that have very solid activity going forward.”
Robert O’Hanlon then went on to show the difference between a city like Dubai and, in comparison, a destination such as Beirut, which in the first 11 months of 2008 showed arrivals up 30 percent from one million to 1.3 million. “Tough times led the industry players to cut the fat from the system and so when stability returned, the benefits are clearly seen in a dramatic rise in RevPAR. What this means is that if you have a great destination and the stability then people will come.”
Returning to the special case of Dubai, O’Hanlon said it had experienced pain which was clearly shown by the figures. “The key is to understand that in the first quarter of 2009, there was an accelerated drop in Dubai’s RevPAR. In 13 out of the last 14 months, occupancy levels have been under strain. But, occupancy is still over 70 per cent and a number of hoteliers around the world would love to see occupancies of this level. And that’s the twist. We have seen Dubai deliver year after year after year. But now we’re in a period of consolidation. Yet the quality of the product continues to be outstanding. What we are seeing is a reduction in visitors from some of the key source countries, where the recession is biting harder.
“Dubai is projected to have an additional 13,250 rooms by the end of 2009 with a further 10,208 planned for the following year. This could throw up some real challenges, especially for unbranded properties and I would not be surprised to see some of the large chains consolidating with some of the unknowns to take advantage of their brands. There is a growing realisation of the importance of bringing in branded service combinations,” O’Hanlon concluded.
Reed Travel Exhibitions – organiser of Arabian Travel Market – has expanded its seminar programme for 2009 to its largest ever levels. During the show’s four days, leading decision makers will tackle a number of key industry issues including the rise of spa tourism, maximising business opportunities in the growing Middle East cruise industry; the outlook for the Gulf’s MICE industry and the future of air travel in the Middle East.
In addition to Deloitte’s report, a number of other industry research papers – including Catererglobal.com’s ‘Recruitment and Retention Strategies in the Middle East Hotel Industry’ and EuroMonitor’s ‘Future Trends for Travel and Tourism in the Middle East’ – will be unveiled during the event.
“During these testing times, the need for the industry to examine itself and to share knowledge is paramount in facilitating a speedy resurgence. We need to be fully informed so we are better positioned to put in place a roadmap which not only sets us on a course for recovery but also better safeguards our long-term future. These sessions are an extension of that,” said Mark Walsh, Group Exhibition Director, Reed Travel Exhibitions.
Arabian Travel Market – which runs until 8th May at the Dubai International Convention & Exhibition Centre – is held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai, and under the auspices of the Department of Tourism and Commerce Marketing, Government of Dubai.
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