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Hotels feel impact of Arab Spring

Operators hopeful tourism will pick up after political upheavals across region

Arabian Hotel Investment Conference 2012
Image Credit: Oliver Clarke/Gulf News
Moderator Richard Thompson, editorial director of Meed; Stephen Lari, principal of Claremont Group; Rami Moukarzel, director development for EMEA Fairmont Raffles Hotels International; Taras Ettl, vice-president development for Middle East and Africa, IHG; Paul Pisani, senior vice-president hotel development, Corinthia Hotels; and Olivier Granet, director development, Middle East Accor, at a panel session during the Arabian Hotel Investment Conference 2012.
Gulf News

 Dubai: More than a year after the popular risings across the Arab world changed the region's business outlook, hotel operators still believe in the investment potential of the Middle East, but expressed concern about the impact of rising Islamist parties on the tourism industry.

The strong tourism fundamentals of the region are still there and recovery is only a matter of time, according to a panel of experts at the Arabian Hotel Investment conference which addressed the Arab Spring impact as a major theme.

"The fundamentals are the same… Sinai is still a great place to go for diving and the fish have not gone away," said Paul Pisani, senior vice-president of hotels development at Corinthia Hotels.

However, the rise of Islamist parties in countries such as Tunisia and Egypt is still a matter of concern for the tourism industry due to certain restrictions, members of the panel said.

During the conference, experts crunched the numbers for the tourism performance of Arab Spring countries and neighbouring countries experiencing a ripple effect. In the first quarter of 2012, hotel occupancy reached 40 per cent in Cairo and 45 per cent in Manama, according to STR Global figures.

In 2011, the situation was more dire. The year on year revpar (revenue per available room) change in 2011 compared to 2010 in Damascus was a drop of 62 per cent, in Cairo 46 per cent and in Bahrain 46 per cent, according to the data.

Some GCC markets suffered from the impact of the Arab Spring. Year on year revpar change in 2011 compared to 2010 was 45 per cent drop in Manama and 6.8 per cent drop in Muscat. Lebanon and Beirut were indirectly hit by the crisis. Beirut had a 22 per cent drop in revpar and Amman saw a nine per cent drop in 2011.

In 2011, the Middle East was at 78 per cent of its 2008 peak figures, according to STR Global data.

Revpar in the Middle East increased 10.4 per cent and only 1.6 per cent in North Africa in the year to date in March.

Occupancy rates in the Middle East reached 69 per cent, Revpar was $149 and the average daily rate was $214 in the year to date in March.

The Arab Spring has not deterred major hotel operators from setting up new properties in these countries, with Hilton Worldwide and Accor group announcing new properties in some of these countries.

"The Arab Spring is one issue. A project takes three years. The Arab Spring happened only 13 months ago so many of the projects were already pre-signed before that. But when you look at the longevity of these projects, they're not short-term. You're talking 15-year returns on investments from a time point of view. So things will happen in between in different places," said Rudi Jagersbacher, Hilton Worldwide President for the Middle East and Africa.

Growth in the Mena region will be driven by the oil-exporting economies, sustained by high oil prices and government spending in 2012, according to Nenand Pacek, co-founder of Ceemea business group.