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, according to Robert O’Hanlon of Deloitte.
He announced the findings of its report - The Middle East Hotel Performance Review - at ATM 2009.
In an analysis of regional trends in hotel performance and profitability, O’Hanlon explained the Middle East was showing a projected two per cent rise in international tourist arrivals which compared favourably with a global reduction of two per cent.
Using data supplied by STR Global, a business partner of Deloitte, he showed that Middle East RevPAR was recording rates of $148 against Europe’s $96 and North America’s $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,” he said.
O’Hanlon was one of 30 industry chiefs participating in ATM 2009’s expanded seminar programme which was sponsored by TTN Middle East magazine.
“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.”
O’Hanlon 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 per cent 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.”
“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.