Beirut and Cairo shine brightest in MENA hospitality survey

03 January 2018

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.

Beirut and Cairo shine brightest in MENA hospitality survey

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. 

Mawaddah International taps Four Principles for lean transformation

08 November 2018

Saudi Arabian hotel and religious tourism operator Mawaddah International has brought in specialist consultancy Four Principles to help institute lean management practices across its portfolio of operations.

Specialised in the provision of Hajj and Umrah pilgrimage services, Mawaddah International has a number of hotels under management in the holy cities of Makkah (Mecca) and Madinah (Medina), and works with an extensive network of tour operators worldwide to provide services to local and international religious tourists, such as through the arrangement of Umrah travel visas, local transportation, and travel to and from the Kingdom.

Described as one of the first full-scale operations designed to serve the needs of pilgrims visiting Islam’s holiest sites, Mawaddah caters to a wide range of clients from a variety of cultural and economic backgrounds, aiming to meet their needs as effectively and cost-efficiently as possible for what is often a defining, once-in-a-lifetime journey.

In an effort to further enhance its guest experience, as well as improve efficiency, Mawaddah has now tapped Four Principles to help instill a lean management culture across the company’s operations. Founded in 2010 by managing partners Seif Shieshakly and Patrick Wiebusch, following individual stints at Porsche Consulting (a German consultancy) and respectively Toyota and Oliver Wyman, Four Principles is a MENA-based globally operating consulting firm specialised in lean management – or the philosophy of Kaizen – a now cross-sector management approach originally derived from the Japanese automotive industry which stresses the notion that small, continuous positive changes can affect major long-term improvements.

According to the firm, which takes its name from the four Kaizen principles of ‘pull’, ‘zero defects’ ‘one piece flow’, and ‘takt’ – together broadly designed to eliminate waste, boost performance and maximise the use of resources – Four Principles was established to bring Kaizen to a new and wider audience in a more accessible and easily implemented manner than before, with the firm since establishing a diverse, cross-sector client roster including locally Avis, food packaging firm Lamina, and Abdul Latif Jameel Motors among others.Mawaddah International taps Four Principles for lean transformationNow operating under the Abdul Latif Jameel banner (since December 2017), Four Principles will soon apply its lean expertise in the transformation of Mawaddah’ operations, with the consultancy describing lean as more than a management tool-kit, but rather a “profound change of corporate culture, from the bottom of an organisation to the top, which is typically based on cooperation and commitment rather than radical changes or top-down edicts.”

“Our mission is to deliver a reliable and valued service to our guests during their stay at the country’s holy sites,” Mawaddah International CEO Karim Al-Sharif said of the collaboration. “We look forward to engaging with Four Principles and are confident this shared effort will optimise our processes and therefore enhance our customers’ satisfaction. This project represents an important step toward our vision to offer pilgrims a memorable religious experience through exceptional hospitality.”

With Kaizen’s underpinning philosophy based on perceiving a business’s value from the customer’s perspective and gearing everything towards optimising that value, the Four Principles partnership with Mawaddah will focus on the implementation of transformation initiatives across multiple value streams – from hotel operations, financial processes, sales strategy and visa issuance processes to procurement, warehousing and stock management – including implementation services in addition to advisory.

The consultants will join internal teams of Mawaddah to identify waste in processes, products and organisational structures. Examples could include double work/rework, excess waiting time or approval bottlenecks in processes, unclear roles and responsibilities and silo mentality in how organisations are run, and over-specification or idle offerings in the products realm. Following analysis and conceptualisation, pilots will be run to trial how waste is replaced by added value, with successful initiatives brought to broader roll-out. Continuous improvement backed by training and coaching will be applied to embed the change.

“In line with the government’s Vision 2030 plan to boost the tourism industry in Saudi Arabia, the hospitality sector continues to witness tremendous growth aimed to cater to domestic and international tourists,” Four Principles Managing Partner Shieshakly said in conjunction with the announcement. “We at Four Principles are proud to be part of supporting this growth through implementing continuous improvement projects with local hospitality establishments in order to deliver additional value to their customers.”