Thursday 21 February 2019

ME hotel occupancy, rates down in 2017, Africa results positive

LONDON, January 24, 2018

The hotel industry in the Middle East reported negative performance results for 2017, while hotels in Africa posted growth across the three key performance metrics, according to data from STR - a leading market research firm.

Occupancy levels in the Middle East slipped 1.1 per cent to 65 per cent,  with average daily rate (ADR) dropping 4.5 per cent to $164.33. Revenue per available room (RevPAR) also fell 5.6 per cent to $106.89.

In the UAE, occupancy rates were recorded at 75.1 per cent in 2017, a 0.5 per cent increase comapred to 2016. ADR was down 3.8 per cent to Dh599.58 ($163.2) and RevPAR also dropped 3.3 per cent to Dh450.04 ($122.5).

STR analysts note that supply growth continues to affect hotel performance in the country, especially with Dubai’s build-up to the 2020 World Expo and beyond. Not only will the amount of new hotel supply continue to influence Dubai’s ADR, the type of new hotel supply entering the market will create a shift in the pricing landscape, with more offerings in the midscale segment. The market has been historically dominated by the upper-tier hotel classes. Additional offerings in the middle-pricing tiers, however, has helped the market’s demand continue to rise, as a wider price range has made Dubai more accessible at various travel budgets.

Dubai continues to add new tourism attractions to stimulate demand growth, helping the market drive hotel demand as inventory expands. Abu Dhabi is following a similar trend, but at a smaller scale due to a smaller market size. Along with hotel supply developments, the market is adding several new cultural attractions, including the Louvre Abu Dhabi, which opened in November 2017, and additional museums slated to open in the coming years. An expected increase in oil prices, combined with sustained growth in the non-oil sector, should drive economic expansion in Abu Dhabi in 2018, allowing the economy to rebound from relatively flat performance during the previous 12 months. That should be an encouraging signal that the hospitality industry will turn the corner

Kuwait's occupancy levels showed significant increase compared to other regions, going up 8.8 per cent to 56.7. ADR dipped 4.7 per cent to KWD62.17 ($206.4) but RevPAR climbed 13.4 per cent to $60.43.

Demand, up 12.0 per cent in 2017, has continued to grow following the economic downturn caused by lower oil prices. However, room rates have now decreased for three consecutive years. December 2017 represented the first month with year-over-year ADR growth (up 8.3 per cent) in Kuwait since July 2016 and was just the fourth positive ADR month for the country since the beginning of 2015.

Occupancy rates in Africa were up 5.6 per cent yo 58.0 per cent, with ADR going up 7.4 per cent to $104.15. RevPAR climbed 13.4 per cent to $60.43.

Locally, South Africa’s occupancy levels dipped slightly, down 0.5 per cent to 64.0 per cent.  However, ADR was up 3.9 per cent to ZAR1,219.07 ($100.8) and RevPAR rose 3.3 per cent to ZAR780.21 ($64.5).

According to STR analysts, the weakened South African rand has helped grow the market’s demand over the past two years. However, supply growth has offset the lift in demand, resulting in a slight dip in occupancy levels. Cape Town, specifically, has seen a surge as a tourism destination, with increased flight accessibility from several key source markets. Additionally, the recent expansion to the Cape Town International Convention Centre has helped bring further corporate demand into the market. Looking ahead, Cape Town’s increasing popularity, from both a tourism and corporate demand perspective, may put a damper on hotel business in Johannesburg and Sandton, with more tourists choosing Cape Town as a point of entry to the country over Johannesburg, and more conference and event planners choosing Cape Town’s enhanced convention center. - TradeArabia News Service

Tags: hotel | Africa | Occupancy | ME |

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