Hospitality markets across the Middle East and North Africa (Mena) have experienced a softer performance in the first half of 2017 when compared to the same six-month period in 2016.
This is according to the EY Middle East Hotel Benchmark Survey Report, which found that the majority of markets experienced a drop in revenue per average room (RevPAR — an industry benchmark for performance) due to a slower global economy and an increase in supply in some of the markets like Saudi Arabia and the UAE, making the first six months a challenging time for the four and five-star hotel industry.
Hospitality markets in Cairo, Makkah and Beirut witnessed the highest RevPAR growth in the region during the first half of this year when compared to the first half of 2016, whilst Dubai recorded the highest overall RevPAR performance at $209 across the Mena region.
According to EY’s research, the emirate has continued to focus on increasing tourism by means of meetings, incentives, conferences and exhibitions (MICE) events, leisure attractions, exhibitions and conferences, a diverse hospitality supply and revised visa policies, which have all contributed to its current performance.
Despite Dubai’s resilience, research firm STR’s preliminary July 2017 data for the emirate indicates a steep performance decline consistent with the year-to-year shift in Ramadan dates.
According to the report, Dubai’s hotel performance continues to be affected by supply expansion. Additionally, STR analysts note that July performance was affected by the Ramadan calendar shift, with the Eid al-Fitr holiday in late June this year versus early July last year. However, Dubai did not experience as severe a downturn as several other Middle Eastern markets during this year’s Ramadan period.
Yousuf Wahbah, Mena Head of Transaction Real Estate at EY, said in a statement: “The hospitality market continues to be affected by the drop in oil prices and challenging economic conditions, which has led to more conservative spending in the government and private sectors as well as among regional tourists. An increase in supply in some of the markets like Saudi Arabia and UAE has also contributed to a drop in the performance. The summer months, which are typically seen as the low season in the majority of Mena hospitality markets, are expected to experience lower occupancy and room rates compared to the first half of the year.”
“Starting September, we expect to see an increase in the hospitality market performance in some of the Mena cities due to the Haj pilgrimage, global forums and regional events being hosted across the region, and regional trips taken during long weekends for upcoming holidays,” he added.