While the UAE has been the pioneer in the region in terms of drawing the world’s attention in every way possible, Bahrain is silently promoting itself as a tourism and events destination. In 2016, tourist arrivals crossed 12.2 million, the third largest arrival numbers in the GCC, according to the Bahrain Economic Development Board.
Jerad Bachar, executive director with the board’s tourism and leisure development department, says: “The authenticity of Bahrain is what differentiates it from the rest of the GCC; it’s the naturally hospitable Bahrain culture and 5,000 years of documented history and civilisation — presented in a modern business environment. You interact with Bahrainis in the country throughout every sector you come across — whether it’s taxi drivers, hotel clerks, or marketing people, they are part of the society.
“The sub-sector developments of tourism are driven by demand; our food scene continues to become more vibrant, every month we have a new restaurant concept opening in Bahrain. And that’s because demand drives it, and not just the country building restaurants so that people will come, but that’s what our guests want. It’s the same with retail offerings.”
According to the Bahrain Tourism and Exhibition Authority (BTEA), tourist arrivals into the kingdom in 2016 were 6% higher from 2015, with 88% of day and short trips from Saudi Arabia over the King Fahd Causeway, which forms the crux of the hotel room demand for the country.
The country, which is an archipelago of 33 islands, is home to a number of international hotel brands such as The Ritz-Carlton, Sofitel, Crowne Plaza, Four Seasons, Radisson Blu, Le Méridien, and many more.
STRAIN ON DEMAND
CBRE Bahrain, citing data from the Bahrain Economic Development Board, recently stated that 15 four- and five-star hotels and resorts with a combined investment of more than US $10 billion will open in Bahrain over the next five years. The brands include: The One&Only Resort, Wyndham Grand Hotel, Fairmont, Vida Hotels & Resorts, Ibis, and Pullman. These hotels are said to add to the Kingdom’s existing supply of more than 190 hotels and resorts. This comprises 18 five-star hotels, 48 four-star hotels, 35 three-star hotels, 81 serviced apartments, and 11 resorts.
The current average hotel occupancy for the region in June 2016 to June 2017 is 60% in comparison to 53% for the city of Manama, CBRE stated. Heather Longden, associate director, CBRE Bahrain notes: “The region is seeing an influx of new hotel rooms in spite of reduced demand and prolonged economic challenges primarily as a result of deflated oil prices. The majority of hotel rooms available in the Bahrain market in 2016 were in the four-star market constituting 43% of total room supply.
“In terms of future supply of rooms in the development pipeline, there are an additional 5,100 rooms planned to be introduced by 2021 in the five-star category which will further advance the standard of property in the Bahrain market.”
The influx of supply and reduced demand is leading to a drop in occupancy rates and average daily rate (ADR). In the past 12 months to May 2017, Manama saw its occupancy rate and ADR drop by 2.8% and 4.7% respectively, resulting in a RevPAR decline of 7.4%, according to STR.
Colliers International forecasts that 2017 will end at a similar level as year-to-date May, hence a RevPAR decline of 7% versus 2016. Manama’s occupancy and ADR are projected to reach 51% and US$ 182 respectively. Despite the lower occupancy rate, Manama’s ADR is still relatively high, comparable to rates achieved in Muscat, Riyadh, or Dubai’s Sheikh Zayed Road and DIFC.
Rashid Aboobacker, TRI’s associate director, is of the same opinion. He says: “Hotel performance levels in Bahrain have declined in the past year across most major parameters. Based on HotStats’ survey of five- and four-star full service hotels in Manama, during the full year 2016, average occupancy stood at 54.9%, up 1.9% percentage points from 2015. However, ARR was down 5.8% to $184.1 and TRevPAR was down 4.3% to $158.9, causing the GOPPAR to drop by 12.2% to $48.9.”
The Diplomat Radisson Blu Hotel, Residence and Spa general manager Kosta Kourotsidis says that occupancy figures were “positive” in the past one year however, “there was a slight drop on ADR and RevPAR, due to the new hotels opening in the Kingdom and the increasing number of rooms”.
He adds that growth in the government-led tourism initiatives and the leisure section is contributing to the hospitality business which is in turn fuelling supply. “The BTEA is promoting Bahrain as a wedding destination that is driving occupancy and raising awareness about Bahrain. The Food Festival that took place in March has increased the revenue of the participating restaurants and has increased the awareness about the hotel outlets. But there has been an increase in the number of new hotels and residences in the past year, and with more future openings, this is certainly going to put a strain on the city’s occupancy level and rates decreases.”
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