Revealed: Best Arab cities for hotel investment

Saudi Arabia proved to be the best performing market for hotel tourism growth last year, while Arab Spring violence saw occupancy levels and room rate levels plummet in Bahrain, Lebanon and Egypt.

A study by Arabian Business, based on figures from accountancy firm Ernst and Young, looked at the occupancy levels, average room rates and room yields in some of the main tourist cities in the region.

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Saudi Arabian cities of Makkah and Madina topped the list, while anti-government protests across the region had an impact on other Gulf and Arab hotspots.

Bottom of the list was the Bahraini capital of Manama, where occupancy levels fell to 32 percent and average room yields slumped by 85 percent.

“Both business and tourist occupancy has obviously been badly affected in Egypt and Bahrain due to the continuing unrest in both countries, and tourist perceptions of insecurity,” Guy Wilkinson, managing partner of hotel consultancy firm Viability said of the rankings.

Egyptian resorts also suffered from ongoing violence in the country, as evident by a dramatic fall in profits for the Thomas Cook Group, Europe’s second-largest tour operator, which was a major player in the country.

“The Red Sea resorts of Sharm and Hurghada have been desperately trying to buy occupancy through offering absolutely 'bargain basement' rates,” said Wilkinson. “By contrast, the pyramids hotels apparently continue to command much higher rates than the beaches in Egypt.”

Dubai, the region’s main tourist hub, ranked highly on the list and its reputation as a ‘safe haven’ helped its occupancy levels and average room rates to move in an upward direction.

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