Hotels in Qatar, UAE top earners in MENA

Hotels in Qatar, UAE top earners in MENA

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The UAE on the other hand seems to have sacrificed ADR (now at $ 260) in order to achieve an OR of almost 81% and attain a RevPAR of just over $ 210, the report said.

Kuwait and Bahrain came in third and fourth, both with a RevPAR close to $ 164. Where Kuwait recorded a high ADR ($ 282) and low OR (58.3 percent), Bahrain achieved a higher OR (73.6 percent) and an ADR of $ 164. Other notable performers were Oman and Algeria, with RevPARs of $ 158 and $ 148, respectively.

“Although these are still rather positive results, it signals that many markets throughout the region are ready to enter the next stage of their hotel cycle. It is a natural progression and part of the hotel industry’s evolution cycle – to grow, restructure and consolidate. Understanding this is fundamental towards adopting the right strategies,” said CEO, MKG Hospitality, Vanguelis Panayotis.

Economic cycles determine the level of demand faced by the hotel sector. Adapting supply and hotel product to the demand also impacts performances. These different components generate cycles that are peculiar to the hotel sector and identifying the factors that influence the trend in the short and mid term is fundamental in planning and making the right decisions, Panayotis said.

“The recent pace of hotel development throughout the MENA region has been nothing short of amazing. What’s even more positive is that it has proven to be sustainable, with an increasing number of tourist arrivals and in turn hotel OR throughout the region, year-on-year. The Middle East is also outperforming the world in terms of RevPAR growth and pipeline growth,” Panayotis added.

The Middle East is also forecasted to be the fastest growing region by 2020, with an estimated growth of 7.1 per cent per year, 69 million tourist arrivals and nearly $ 4 trillion in tourism investments.

“Although MENA is the most dynamic region in the world, it is still susceptible to current international risks, especially in the upscale hotel category. Hence the need for more conservatism towards research and accurate forecasting,” said Colette Ambiehl, senior consultant and director of MKG’s office responsible for the region.

According to MKG Hospitality’s forecasts, mid-scale and budget hotel products will help achieve the region’s next stage of the hotel cycle.
“A destination should not be mono-segment, but rather have an even-spread of hotel products. This balance opens up the market and fuels more visitors, particularly seeing that the region has the highest chain hotel penetration rate,” Panayotis further said.

“New hotel segments contribute to a destination’s overall goal of attracting an increasing number of arrivals. They diversify a destination’s available product and provide more options for visitors – not everyone wants to or can stay in upscale hotels these days – therefore they capture a greater market share.”

“Furthermore, and more importantly for owners, mid-scale and budget hotels are more resilient towards a bubble burst and endure external threats somewhat better, such as economic recession.

“Above all, these hotel products allow operators to sustain a relatively high OR, ADR and positive RevPAR, whilst offering owners a good Return on Investment (ROI), as their operational expenses are more flexible,” Panayotis noted.

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