We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sun 19 May 2002 04:00 AM

Font Size

- Aa +

Hotel occupancy rates surge

The Middle East hospitality industry was affected by the Sept 11 attacks, but seven months on, the picture is considerably different

|~||~||~|The taxi driver who frowned when he was asked how business was in Dubai was in the months after September 11, is today more upbeat. The same goes for the camel driver that walks the shores of beach resort hotels, the numerous waiters and waitresses and the flight attendants employed by various airlines.Arabian Business discovered from interviewing a number of hotel establishments that the regional hotel industry has recovered much of the lost ground, while the picture remains dim for the Levant and North Africa where Jordan, Lebanon, Syria, Egypt and Morocco are still affected, perhaps not so much by the events of September 11 anymore but more the protracted Palestinian-Israel situation. According to Andersen Hotel Industry Benchmark Survey, “the Middle East was enjoying mixed performance until August 2001, with markets in the Gulf and Egypt ahead of 2000. Of the 25 markets in the Middle East tracked by Andersen, 24 recorded a decline in September 2001 for room occupancy compared to September 2000.” While the initial effect on the hotel industry in the wake of the September 11 attacks primarily came in cancellations and postponements, the situation today has changed considerably. “Before September 11, the Middle East showed a small 0.3% growth rate mainly due to strong performances by Dubai (United Arab Emirates) and Jordan. But the region plunged 30% in the last four months of the year to end with a drop in international arrivals for 2001 of 9%-the worst result of all the regions. Egypt, which accounts for a quarter of all arrivals to the Middle East decreased by 15.6%, while Jordan managed to recuperate positive growth by December to end the year with an increase of nearly 4% in international arrivals,” said WTO Secretary-General Francesco Frangialli. However, for 2001, World Tourism statistics indicate that travel to the Middle East dropped 30 percent in the last quarter, but this decline has now tailed off as both tourism and commerce return to the region. Virtually all the hotels Arabian Business spoke to in October have reported positively six months later.For Lebanon, which received 20,000 reservation cancellations in the wake of September 11, the year 2001 was positive, marking a 20 percent increase in visitors over 2000, according to menareport.com. Morocco’s key tourism industry in January 2002, reported a 43 percent drop in receipts, reported Reuters. The state foreign trade regulatory Office des Changes said in early April that receipts for January stood at US $102 million, down from US $179 million in January 2001. According to the latest survey from Andersen, hotel occupancy rates in Casablanca have declined 22.7 percent and Marrakech 42.7%.||**|||~||~||~|In Jordan, which had reported an 85 percent hotel cancellation, a decline of 18 percent in the first week of October 2001 by visiting tourists, suffered further because of the escalating political Israeli-Palestinian situation. In an interview with the Jordanian weekly newspaper, The Star, Talib Al Rifai, tourism minister said in 2001, 1.47 million tourists visited the kingdom representing merely a 3.6 increase on the previous year. The stagnant number in visitors coupled with significant increases in room supply has contributed to the downturn in hotel performance. “Especially when one considers that “the number of hotel rooms has almost doubled since peace was declared with Israel in 1994,” says the Andersen Hotel Industry Benchmark Survey. However, the kingdom has been able to affect the balance of the scale through medical tourism. Jordan’s private hospitals, reported Xinhua news agency, have been emerging as a major hard currency earner with thousands of Arab patients traveling to the kingdom for medical treatment. “Annually, up to 100,000 Arab patients received medical treatment in Jordan’s 56 private hospitals, known for their advanced technologies in the fields of coronary care and kidney, brain and eye surgeries,” reported the Jordan Times. The new wave of medical tourism is expected to generate just under US$ 700 million according to official figures from the government.Egypt where hotels suffered drastically and were reporting occupancy rates as low as 20-30 percent is now on the rebound. The heavily marketed hotels at Sharm El Sheikh, the red sea resort and Cairo are still not where they should be but have certainly improved since October 2001 when air and hotel packages for 4 and 5 day stays were in the range of US$ 250-400 from most of the Arab countries. As in Lebanon, the shortfall from business in Europe was offset to a certain degree by an increase in tourism from the Gulf and what some industry analysts call as a redistribution of travel in the region. The Four Seasons in Cairo, which had not lowered its room rates in the aftermath of September but reported occupancy rates above 40%, has recovered. “The hospitality industry in Egypt is doing much better than we thought it would do. The fact that the sentiment is not to travel to the US or Europe and travel more locally has definitely benefited the industry,” said Dimitrios Zarikos, general manager at the Four Seasons in Cairo. “Our occupancy rate while is substantially higher, for sure we have not recovered what we lost from September to December.” Zarikos emphasized again that the Four Seasons in Cairo had not made adjustments in its rates, staffing levels or quality of service. Zarikos foresees better performance in 2002 although he considers it a transition year and remains cautiously optimistic. ||**|||~||~||~|In the Gulf, which is usually insulated from direct effects, the story is not very different. The 3-star hotel group in Bahrain, Arabian Business interviewed appears to have recovered its 30-50 percent loss, according to Chandra Senan Pujari, coordinator for the Ramee Group of Hotels in Bahrain. “Occupancy rates have increased as a result of exhibitions and tournaments and business is moving up by 25-30 percent,” says Pujari. While the group according to Pujari, picked up in December to January and the rates have remained the same, he believes “there is still room for improvement.” In Dubai where the government has been aggressively promoting itself as a Caribbean equivalent the situation is slightly different. While the emirate did suffer in terms of the number of tourist visitors and occupancy rates at its hotels, being host to large exhibitions and conferences like the Big 5, Index, Gitex helped sustain the 267 hotels that usually have an average occupancy rate of 61%. The Eid holidays in December and February followed by the Dubai Shopping Festival (DSF) greatly influenced traffic to and from Dubai. All of this not surprising given World Tourism Organisation figures, which describe Dubai as one of the world’s fastest growing business and tourist destinations. Tourism in 2000 made 20% of GDP and since 1997 revenues have been rising by an estimated 11% and the number of visitors to the emirate by 5% annually. “Dubai, itself is still in the top 10 long-haul destinations in 2002 for British tour operator Kuoni, who reported bookings for the emirate were up 37 percent in the first half of 2001, and still maintained positive growth by year-end, despite events in the US and Afghanistan,” according to Sami Zoghbi, the regional managing director of hotel operator Le Meridien.City Centre Hotel, which is adjacent to the flagship mall of down town Dubai, has been more fortunate than most hotels. According to Susan Mikloska, although the hotel was approximately 20% down in the last quarter of 2001, the beginning of this year figures have gained substantially, between 5 - 10% and presently occupancy rates are at similar levels to 2001. “The current rates are the same as before with guests receiving greater value for money through promotions and incentives,” said Mikloska. “Competition in the market is greater than before due to the ever increasing potential of the tourism sector in Dubai. The Hotel is now seeing comparable revenues as last year and we are confident that we will meet our budget forecasts for 2002,” added Mikloska.Steven Allen, sales manager at Rydges Plaza, an Australian-owned hotel chain of the publicly listed Amalgamated Holdings Limited says, “For March occupancy wise we have had the best month we have ever had, although our rates today are today 10 percent lower than the same period in 2001.” Rydges Plaza that depends on business travelers saw an increase in its bookings from the beginning of February 2002. Allen attributes the revival in the number of his visitors and the quick recovery in Dubai’s numbers largely to Sheikh Mohammed’s efforts to encourage people to come to Dubai and the efforts of the Dubai Department of Tourism and Commerce Marketing. “They dug deep financially, and when I was on vacation in the UK in early March and a local radio station had an Emirates Airlines advertisement which absolutely shocked me but I was delighted to hear it,” says Allen.||**|||~||~||~|When asked how business today is, Gerald Lawless, managing director of Jumeirah International whose properties comprise Burj Al Arab, Emirates Towers, Jumeirah Beach Hotel and several other establishments, said “There is absolutely no comparison at the moment, we are running with all hotels virtually at 100 percent occupancy, and in some cases at a 100 percent.” Lawless says the group had a full recovery since before Christmas, in terms of the number of tourists staying at its hotels. He also gave credit, in terms of giving the message of ‘its business as usual’ in Dubai, to the efforts of the Government of Dubai and the Department of Tourism. “The business segments that are coming through are not only for exhibitions, the overseas tourism market particularly from Europe has shown an amasing recovery,” said Lawless. Jumeirah International expects strong business on the leisure side in the coming summer months. Imad Elias who is the general manager and corporate vice president of the Bustan Rotana Hotel, which is part of the Rotana Group, says that business is back to normal. “September 11 is like a cloud that has come and gone. We are 5% up year over year and the recovery is due to the confidence of the market in Dubai,” said Elias. “We realise that we should not rely on North American business as they have no loyalty to the Middle East an we intercepted new markets in the GCC, India, Egypt Lebanon and the UK market is definitely improving in terms of tourism,” added Elias. While the group’s occupancy rates have improved to 80 percent, Elias admits the room rates were affected because of an increase in supply in terms of visitors, essentially pushing prices down 10 percent. Hilton International, which has a large presence in the Middle East, and saw the cluster of its hotels across the Arabian Peninsula affected, has also recovered, according to Gaurav Sinha. The group’s initial cancellations were primarily corporate groups, but “Business has jumped since beginning of January as well as occupancy rates across the region have increased,” said Sinha. “We envisage this trend to continue over the Coming months and a return to normalcy by the third quarter. Compared to last year occupancy levels are similar and in some cases higher for our brand. Consumer confidence is returning and people will continue to travel - this should reflect in increase in tourism traffic across the Arabian Gulf,” added Sinha. The group recently opened a new property in Dubai, the Hilton at the Creek, tailored to meet the business travelers to Dubai.The Dubai Ritz Carlton, which according to its manager at the time, Steven Banks, was running at 50% and not it usual 90% occupancy rate in October, has today recovered and is in positive territory. “To be brutally frank with you, as an American company the last thing we want to do is keep on associating our business with what happened in September,” said Allison de Pattenden, regional director of public relations for the Ritz Carleton. While de Pattenden declined to disclose the actual occupancy rate in March, she said, “We are delighted our business is doing very well and I think 2002 will be a period of growth and new business.” “A lot of credit has to go to Dubai’s efforts in countering the negatives and the credit has to go to them really,” said de Pattenden. The Ritz Carlton has doubled in size opening a Ritz Carlton in Turkey and Qatar. ||**|||~||~||~|“We have recovered completely from 11 September and Dubai is doing extremely well as we have not been affected like some of the other destinations,” Hussain Ali Lootah, CEO of the Dubai Shopping Festival told Arabian Businss. The February 2002 Andersen Hotel Industry Benchmark Survey indicates the occupancy rate for Dubai hotels (year over year performance) is 80.2% down merely 2.8% from the previous year. Ramada International Hotels & Resorts entered into an agreement that will result in the development of 80 hotels in the Middle East over five years. Le Meridien plans to open an additional four new hotels in the region as well. Radisson SAS Hotels & Resorts, which currently has 107 hotels operating in the region, also has 40 hotels under development in 37 countries and is the sole franchiser in Europe, the Middle East and North Africa for Radisson Hotels & Resorts.The feedback certainly indicates that the industry is faring much better today as opposed to the last quarter of 2001. More importantly, developments in the first quarter of 2002 indicate, that despite the economic downturn, the shock of the September 11 events and the existing Palestinian-Israeli conflict the hospitality sector and tourism will continue to flourish. European tourism to the Middle East and intraregional tourism in the Arab world have revived the region as a prime destination. —Massoud Derhally||**||

Arabian Business: why we're going behind a paywall

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Read next