Aranca | MENA Tourism and Hospitality– May 2014 | Special Reports

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The Aranca MENA Tourism and Hospitality Report for this month (May 2014) has a special spotlight on Saudi Arabia Tourism Industry while Leisure Tourism is the special theme for this month’s edition. It also looks at the latest trends in Hospitality sector across countries in the GCC region.

Transcript of Aranca | MENA Tourism and Hospitality– May 2014 | Special Reports

  • 1.MENA Tourism and Hospitality Report Theme: Leisure Tourism May 2014 aranca.com

2. Table of Contents 01. MENA Tourism Synopsis..............................................................................................1 02. Hospitality Market Update........................................................................................2 03. Saudi Arabia Tourism Industry...................................................................................4 04. Theme: Leisure Tourism ..............................................................................................6 05. Hotel Pipeline and Expansions .................................................................................8 06. Trends in Hospitality and Tourism in GCC..............................................................10 3. MENA Tourism and Hospitality Report May 2014 1 Connect with us: 01 MENA Tourism Synopsis The outlook for MENA tourism looks bright, backed by strong fundamentals, improving economy and several initiatives by the government to develop the sector MENA TOURISM & HOSPITALITY According to STR Global, the Middle East was the world's top tourism performer and saw strongest increases in hotel performance in Q12014. Demand outpaced supply across all regions globally; however, the Middle East led the trend with over 9% y-o-y increase in demand. Similarly, on the supply side, the Middle East reported the highest increase of ~6% compared with ~4% in Asia and~2.5% in Central & South America. In terms of occupancy rates, STR Global states that any region that operates in excess of 60% is performing very well. The Middle East witnessed occupancy rates of 75.1% during Q12014. Average daily rate (ADR) in the region was one of the strongest in the world at $220, resulting in revenue per available room (RevPAR) of $165 in Q12014. In March 2014, key hospitality sector indicators in the MENA region improved; occupancy rates rose 0.5 percentage points (pps) y-o-y to 66.9%, while ADR increased 2.1% y-o-y to $178.18 and RevPAR expanded 1.4% y-o-y to $119.19. Occupancy rates in Manama (Bahrain), Riyadh (the KSA), Doha (Qatar), and Abu Dhabi (the UAE) increased in March 2014, while that in Dubai (the UAE), Cairo (Egypt), and Beirut (Lebanon) declined. ADR rose the most (8.5%) in Riyadh (the KSA) to $247.56. On the other hand, Doha (Qatar) recorded the largest decline in ADR of 10.4% to $187.18 due to increased competition. Manama (Bahrain) and Riyadh (the KSA) reported the highest growth in RevPAR in March 2014 on increased occupancy rates. RevPAR fell the most in Beirut (Lebanon), declining 29.8% to $54.45 due to lower occupancy rate. Egypt is seeking investors for the planned sale of coastal land to increase the number of hotel rooms to 15,000 from 7,000 in five years. The country aims to attract 25 million tourists and generate $25 billion in revenue by 2020. Abu Dhabi rolled out various new programmes at the Arabian Travel Market (ATM) held in Dubai during 5-8 May 2014 to promote tourism among GCC travel influencers and drive visitor numbers.. The key highlight was the Abu Dhabi Summer Season, scheduled for June 5 to August 31. Other areas of focus include leisure, corporate, and MICE business. GCC countries issued a warning to citizens against travelling to Lebanon owing to political unrest. However, Saudi Arabia lifted its travel ban in May 2014 after the security situation improved in the country. Going forward, other GCC countries are expected to follow suit. Accordingly, the tourism situation in Lebanon is anticipated to improve, as GCC nations accounted for the majority of the countrys tourism revenue. 4. MENA Tourism and Hospitality Report May 2014 2 Connect with us: 02 Hospitality Market Update12 The hotel industry in the Middle East & Africa (MEA) region reported marginal growth in key performance indicators for March 2014. Occupancy rates increased 0.5 pps y-o-y to 66.9%, and ADR grew 2.1% y-o-y to $178.18, resulting in a 1.4% y-o-y rise in RevPAR to $119.19. OCCUPANCY RATE Manama (Bahrain) reported the highest increase in occupancy rates of 14.8 pps y-o-y to 60.7% in March 2014. This growth can be ascribed to the increase in occupancies at four- and five- star hotels and government initiatives in organizing cultural activities (Heritage Festival under the patronage of King Hamad bin Isa Al Khalifa, Bahrain Book Fair, and Spring of Culture Festival). Occupancy rates in Riyadh2 (KSA) increased 10.7 pps y-o-y to 72.5% in March 2014, primarily driven by MICE activities and higher demand. Doha (Qatar) experienced an increase of 5.9 pps y-o-y in occupancy rates to 75.2% in March 2014 on rise in overall tourist demand. Occupancy rates in Abu Dhabi2 (UAE) grew 4.4 pps y-o-y to 79.1% in March 2014. Passenger numbers rose 15.1% over the previous year due to the expansion of Etihad Airlines, which helped in attracting over 4.5 million passengers to Abu Dhabi International Airport in Q12014. The leisure segment experienced the highest growth in demand, with recreational facilities on Saadiyat Island and Yas Island generating increased demand for hotels in the city. Despite a marginal reduction of 1.1 pps y-o-y in occupancy rates in Dubai2 (UAE), the metric remained the strongest in the region in March 2014 at 87.2%. Although demand grew significantly, Dubai could not keep up with new supply, which resulted in negative occupancy. Occupancy levels in Cairo2 (Egypt) decreased 2.9 pps y-o-y to 39.0% in March 2014 due to the effects of political instability. Tourist numbers are expected to decline further. Beirut (Lebanon) recorded the largest decrease of 13.0 pps y-o-y to 38.9% in March 2014, impacted by adverse local and regional political and security developments. AVERAGE DAILY RATE (ADR) Jeddah (KSA) recorded the largest increase in ADR of 8.5% to $247.56 in March 2014; this can be ascribed to the peak season (typically begins in February) and higher corporate demand. 1 STR Global Data, Middle East/Africa Hotel Sector Performance for March 2014 2 HotStats MENA Chain Hotels Review (Four & Five star hotels only) 5. MENA Tourism and Hospitality Report May 2014 3 Connect with us: Cairo (Egypt) hotels reported a 3.2% growth in ADR to $113.50 in March 2014. Lower demand forced hotels to shift their focus to increase rates in order to improve profitability and balance the losses incurred from reduced demand. Abu Dhabi (UAE) witnessed a 2.2% rise in ADR to $157.76 in March 2014, primarily driven by an increase of 12.4% in prices charged in the corporate segment and 9.7% in conferencing segment. Dubai (UAE) hotels saw a decline of 1.2% in ADR during March 2014; however, ADR remained the strongest in the region at $398.71. ADR in Riyadh (KSA) declined 4.4% to $255.84 in March 2014 on increased competition. Doha (Qatar) reported the largest decrease in ADR of 10.4% to $187.18 in March 2014 due to intense competition in the corporate segment. REVENUE PER AVAILABLE ROOM (REVPAR) In March 2014, Manamas (Bahrain) RevPAR grew the most (29.6%) to $119.14, primarily driven by increased occupancy rates. Riyadh (KSA) witnessed a growth of 12.1% in RevPAR to $185.40. Despite a 4.4% decline in ADR, the 10.7 pps increase in occupancy levels resulted in a positive growth in RevPAR. Abu Dhabi (UAE) registered an increase of 7.8% in RevPAR to $130.01 in March 2014, driven by higher occupancy rates (up 4.3 pps) and ADR (up 2.2%). RevPAR in Dubai (UAE) declined 2.1% to $356.62 in March 2014, as both occupancy rates and ADR declined marginally. Hotels in Cairo (Egypt) struggled to recover from the impact of the political unrest in 2013. An increase of 3.2% in ADR was unable to offset the 2.9 pps fall in occupancy rates; this resulted in a 3.8% decrease in RevPAR to $44.25. Doha (Qatar) posted a decline of 7.6% in RevPAR in March 2014, as higher occupancy rates were insufficient to negate the impact of a 10.4% decline in ADR. RevPAR in Beirut (Lebanon) witnessed the largest decrease of 29.8% to $54.45, primarily due to a 13.0 pps fall in occupancy rates. Table 1: Statistics in key MENA countries3 Occupancy ADR Occupancy ADR Country Mar 2014 Mar 2013 Mar 2014 Mar 2013 JanMar 2014 JanMar 2013 JanMar 2014 JanMar 2013 Egypt 43.7% 53.8% EGP453.0 EGP459.9 43.6% 49.8% EGP432.1 EGP454.4 Saudi Arabia 71.1% 72.0% SAR713.4 SAR706.3 72.3% 69.0% SAR714.4 SAR720.7 UAE 84.0% 83.1% AED871.9 AED873.7 83.5% 82.6% AED900.2 AED866.5 3 STR Global Data, Middle East/Africa Hotel Sector Performance for March 2014, Aranca Analysis Denotes increase in parameter Denotes decrease in parameter 6. MENA Tourism and Hospitality Report May 2014 4 Connect with us: 03 Saudi Arabia Tourism Industry4 KSAs tourism sector has been growing strongly over the years; international tourist arrivals are expected to reach 20.7 million by 2024, driven by the religious tourism segment and government initiatives for developing the sector International tourist arrivals to reach 20,652,000 by 2024: In 2013, KSAs travel and tourism sector ranked 33rd worldwide in terms of absolute contribution to GDP. The number of international tourists visiting the KSA is estimated to reach 20,652,000, with revenues expanding at a CAGR of 5.6% to SAR60 billion over 201424. This can be ascribed to increased demand for religious tourism and governments active support in terms of visa policy relaxation and extensive investments in tourism infrastructure. Direct contribution to GDP to touch SAR78.9 billion by 2024: The travel and tourism sectors direct contribution to GDP is estimated to increase at a CAGR of 4.7% to SAR78.9 billion (1.8% of GDP) in 2024 from SAR47.5 billion (1.7% of GDP) in 2013. Leisure tourism accounts for major share: Spending of inbound and domestic tourists on travel totaled SAR76.3 billion in 2013. Leisure tourism accounts for three-fourths (SAR57.2 billion) of travel spending, whereas business travel spending constitutes the remainder (25.0% or SAR19.1 billion)