With just five years to go until 2020, the hotel landscape is diversifying and hoteliers are competing to ensnare the elusive millennial market with seamless digital processes and personalised experiences
2014 threw up some unexpected surprises for hoteliers across the Middle East, with Russia, one of the region’s key inbound markets suffering from the crash of the rouble, which went down by more than half its value against the US dollar within less than 12 months last year.
Countering this to some extent, however, was the return of the Egyptian market, and many hoteliers reported that occupancy began to improve across the country from almost the day after Abdel Fattah Saeed Hussein Khalil el-Sisi, the sixth President of Egypt took office in June.
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Hoteliers have suggested, however, that Egypt has begun taking market share from the UAE, particularly with visitors from Russia and the CIS more inclined to choose a cheaper holiday destination during tough economic times.
Preliminary November results for Dubai released by STR Global indicated negative RevPAR performance, with a 9.2% decline to AED 835.72 (US $227.53). The data also revealed a 7.3% increase in accommodation supply, outweighing demand, which increased 4.6%. Additionally, a 2.5% decrease in occupancy to 85.5% was reported along with a 6.9% drop in average daily rate to AED 977.84 ($266.23).
Despite this, STR Global’s 2015 RevPAR outlook for Dubai remains positive, with occupancy expected to stay at around 77%, suggesting continued pricing power. On average a 0.9% increase in revenue per available room is expected over the course of the year.
Rotana chief executive officer Omer Kaddouri concedes that the year ahead is likely to be a positive one.
“We anticipate growth in metrics for all cities in 2015 and the top RevPAR growth stories will be in the GCC cities, especially in the UAE, and we are forecasting average occupancy growth of 2.5%,” he explains.
Kaddouri’s optimism stems from the current regional boom phase of infrastructure development. Capacity in terms of room numbers, must increase by 147% to achieve more than 273,000 rooms by 2018, and beyond that the World Expo 2020 is expected to attract 25 million visitors to Dubai.
However, the region’s hoteliers are expecting a slight slow down in performance in 2015 compared to the successes of 2013-2014, owing to the volume of supply that bombarded the market during that period.
Chris Hewett, senior consultant at TRI Consulting agrees that we may see “a softening of rates” across the board.
“I think it’s going to start occurring in the first half of the year and I think overall the competition is really heating up.”
Accor HotelServices Middle East chief operating officer Christophe Landais agrees with Hewett, saying: “If you look at Q1 2014, growth was more than 33% one year to another so it was really booming. What we will see is a period of slow down — it’s still growing, but maybe not to the same extent as in Q1 2013 to 2014.”
Landais expects to see 12% growth in revenue over the next 12 months, with a 6 – 7% increase in RevPAR.
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