Beirut and Cairo shine brightest in MENA hospitality survey

Beirut and Cairo have posted strong growth figures in the luxury hospitality sector according to a year-on-year survey report from Big Four firm EY, while other cities across the Middle East have returned mixed results.

The latest ‘MENA Hotel Benchmark Survey’, released by professional services giant EY, has reported an overall drop in city-by-city performance for branded four and five star hotels across the Middle East and North Africa. Yet Cairo and Beirut, the capital cities of Egypt and Lebanon, shine bright among the region’s varied fortunes.

Taking in the survey’s key performance indicators of occupancy and average room rate (ADR), and then revenue per available room (RevPAR), Beirut and Cairo have recorded the strongest MENA growth figures in October as compared to numbers from the same month last year, with occupancy increasing by 13.5 percentage points in Beirut (to 68.3%), and Cairo achieving the highest rises in both ADR (87.8%) and RevPAR (127.6%).

For Cairo, this follows on from a strong September performance, where the hospitality sector was up 69.4% in ADR and 77.7% in RevPAR from September 2016 figures. Meanwhile, Beirut’s RevPAR has risen by 34% in October thanks to both the increase in occupancy rates and a concomitant rise in ADR from US$137 to US$149. According to the consulting firm, the stronger performance in Beirut can be attributed to the lifting of travel bans and attractive climate conditions for tourists.

On the other end of the scale, Doha has notched the sharpest decline in occupancy, down 11.1 points to just 57.3%, with the restrictions imposed on Qatar by Saudi Arabia, the UAE, Bahrain and Egypt and the severing of diplomatic and transport ties taking its toll on the country’s hospitality sector. The UAE and Saudi Arabia remain among the sector’s main source markets. This has resulted in a drop in ADR from US$197 to US$167 and a decrease in RevPAR of 28.8%.

Results elsewhere were varied, including in-country in the UAE, one of the region’s primary tourism and commercial hospitality markets. In the capital, average occupancy rose by 8.9% on the back of the city hosting the 44th World Skills Competition, along with the kick-off of the Abu Dhabi cruise season (which runs from October to May), seeing a slight US$3 rise in ADR and an overall 14.4% increase in RevPAR.

Alternatively, the hospitality sector in Dubai saw drops across the board, with occupancy down 2.4%, and ADR and RevPAR dropping by 6% and 8.7% respectively as hotels compete to maintain occupancy against increased supply by lowering rates. This rate adjustment to rising competition can be seen to mirror current circumstances in the city’s office real estate market, where rental prices have recently softened due to oversupply. Regardless, Dubai can still boast of one of the best hotel occupancy rates at 79.6%, while the average RevPAR of $215 remains the highest in the region despite falling from $236 in October 2016.

EY’s leader in the real estate, hospitality and construction sectors for MENA, Yousef Wahbah, expects the softer hospitality performance trend to continue in the region, but foresees the possibility of some improvement for a few cities over the short term due to annual festivals, events and exhibitions.

“While occupancy rates are fluctuating throughout the MENA region, the average room rate in the majority of hospitality markets has declined, affecting the RevPAR performance across the four and five star hotel segment. Having said that, as the year draws to a close, the hospitality market is entering what are historically the stronger performing months of the year, so we may see an improved performance in the sector when compared to previous months,” said Wahbah.