The Kempinski Hotel Bahrain City Centre two-tower 460-key property opened in spite of the unrest in 2011. The Kempinski Hotel Bahrain City Centre two-tower 460-key property opened in spite of the unrest in 2011.

With hotel occupancy and rates on the rise, and the successful conclusion of the 2013 F1 Grand Prix, Bahrain’s future looks bright. But its success will depend on the country’s ability to manage room supply and retain political stability:

Hospitality updates from Bahrain over the past two years paint an unclear picture of the market, with negative reports of continuous political upheaval, airline closures and stalled hotel developments headlining next to brand debuts, tourism project launches and hosted world events.

The statistics are less contradictory, however, with the very latest market reports obtained by Hotelier Middle East showing positive growth in 2012 on 2011, continuing into the first quarter of 2013. Global consultancy HVS’ 2013 Middle East Hotel Survey, released in April, reveals a rebound in the hotel market in 2012 over 2011.

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Average annual occupancy levels at Manama hotels increased from 34% in 2011 to 49% in 2012, according to the report. HVS Dubai managing director Hala Matar Choufany, co-author of the survey, attributes the growth to “increased visitation as a result of the restored political situation”.

Up in the air
Speaking of visitation, air passenger movements in Bahrain increased 12% in 2012 to 8,479,884 compared to 7,568,200 in 2011, according to HVS. To put this into perspective, the highest passenger movements in Bahrain since 2004 were recorded in 2009 at 8,736,974.

Growth in passenger movements has been recorded in spite of troubles among the country’s airlines, culminating in the collapse of its second carrier, Bahrain Air, which went into voluntary liquidation in February 2013, claiming it could not pay back financial losses accrued in relation to “the unstable political and security situation in Bahrain”.

Meanwhile, Bahrain’s national carrier Gulf Air announced restructuring plans in December 2012, following the resignation of its CEO Samer Majali. At the beginning of this year it laid off 15% of staff and cut four loss-making routes. However, on April 23, the airline said it had reduced its losses by 50% in the first quarter of 2013.

Bahrain-based Kanoo Travel director Nabeel Kanoo downplays the impact of these airline troubles on airlift and hotel performance.

“We have Emirates, Qatar, Etihad, Air Arabia, British Airways, Lufthansa, Cathay Pacific, then we have our neighbours who just drive to Bahrain,” said Kanoo, highlighting the importance of the inbound market from surrounding Middle East countries.

HVS’ Choufany comments: “The airline business has played a significant role in increasing visitation levels as experienced in Dubai and Doha. Historically, much of Bahrain visitation comes by land and the share of international visitation has been conservative.

“Gulf Air could play a significant role moving forward, however, this has to be coupled with major developments in the city and active marketing of Bahrain as a safe and stable economy and destination,” she adds.

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