Saudi cities defy regional slump in hotel occupancy

Dubai: While hotels in most Middle East markets recorded average to low performances in August, the Ramadan month helped the Saudi Arabian cities of Makkah and Madina record the highest increases in occupancy and RevPAR (revenue per available room) compared to the same period in 2010, according to a report by global consulting firm Ernst and Young.

The E&Y Middle East Hotel Benchmark Survey for August revealed revenue levels for Makkah and Madina hotels shot up 55.3 per cent to $722 (Dh2,652) and 52.3 per cent to $353 respectively over August 2010.

The occupancy rate increased ten per cent in Makkah and four per cent in Madina, which brought occupancy levels to 91 per cent and 79 per cent in the two cities respectively.

The UAE's hotels, on the other hand, suffered a drop in occupancy and revenue owing to slow summer tourism coinciding with Ramadan.

Statistics

Occupancies and revenues for Dubai hotels were down 3.9 per cent to 52.6 per cent and six per cent to Dh284 respectively in August, compared to the same period a year earlier.

Abu Dhabi hotels experienced a 17.5 per cent fall in RevPAR to Dh287 as occupancies fell seven per cent to 54 per cent.

According to industry experts, the decline was due to the slow month of Ramadan when fewer trips to the region were made.

However, the year-to-date performance of Dubai hotels saw a 7.1 per cent increase in revenue (to Dh621) over the corresponding period of January to August 2010, according to the report, with occupancy levels touching 78 per cent.

Owing to ongoing political tensions, hotels in Cairo recorded revenue drops of 66.2 per cent — the highest in the Middle East — in August, while occupancies were a mere 17 per cent compared to 48 per cent in the same month a year earlier, a 31 per cent decline, according to the E&Y analysis.

In the year-to-date performance, however, it was Bahraini hotels that suffered the maximum hit — once again owing to political unrest.

Hotels in Manama skuffered a 60 per cent drop in revenue in the period January to August 2011 compared to the same period a year ago.

As Yousuf Wahbah, Mena Head of Transactions, Real Estate, at E&Y, said: "Egypt and Bahrain continue to see significant drops in occupancy and room rates on a monthly and year-to-date basis.

"The agility of Beirut's hotels in coping with change is evident as they cut room rates considerably [by 27.8 per cent] in August compared to July. The lowered room rates come with a view to meet challenges posed by new global competition as they seek to attract more tourists."

Wahbah also said that with the exception of Makkah and Medina, which saw occupancy increases in August, occupancy and rooms yields declined in almost all other markets tracked by E&Y's benchmark survey compared to same period in 2010.

According to another report released last week by the UN's World Tourism Organisation (WTO), the Middle East is set to see an approximate 145 per cent rise in tourist numbers by 2030. The WTO numbers also show that the region's global market share is set to grow from six per cent in 2010 to eight per cent by 2030.

By 2015, emerging economies are expected to receive more international tourist arrivals than the advanced economies, according to the WTO, with their share predicted to reach 58 per cent by 2030.

"This growth offers immense possibilities as these can also be years of leadership, with tourism leading economic growth, social progress and environmental sustainability," said Taleb Rifai, the UNWTO Secretary-General.