The industry is full of mixed opinions when it comes to looking back on hotel performance in 2010.
Reactions depend firstly on where in the Middle East your business is located, as more than ever before we have seen marked differences in performance – where Dubai, Abu Dhabi and Doha have struggled, destinations such as Lebanon, Egypt and Jordan have thrived.
As a result, there are some who have only positive things to say when looking back on 2010, others who have reported a dismal outcome and those – perhaps the biggest group – who speak with relief that the year is coming to a close, but with optimism for growth ahead.
Mixed feelings depend also on what sort of hotel you operate. According to our experts, the four-star and budget sectors have had a strong year and the leaders of brands such as Premier Inn, Holiday Inn Express and Citymax are likely to agree.
But then, the bulging rooms at some beachfront locations, whatever the weather, have shown that some luxury properties have found a way to succeed too, albeit dropping rates in line with the current economic situation.
Even performance data from the likes of STR Global and MKG Hospitality does not tell as clear a story as in previous years. As STR Global’s Konstanze Auernheimer, across the GCC there has been a 9% rise in demand (year to date September 2010), but there have been declines in the key indices of occupancy, ADR and RevPAR.
Data for individual markets is presented, but these figures must be put in perspective. And in this regard, the impact of 2010’s new supply on the rate of recovery plays a major role. Occupancy across the region is stabilising, but it just can’t quite keep up with the extra rooms the region’s visionary owners and operators keep opening.
However, this brings us to yet another conundrum, as despite its negative influence on the numbers, the new supply – not to mention the 2011 pipeline, which could see an additional 19,824 rooms according to TRI – is a good, even necessary, development. Plus, it reflects confidence in the market, which is surely set to grow and grow.
Indeed, over the past few months, Peter Goddard at TRI says there has been “a revival in the hotel development sector” as projects previously put on hold come on line. Where the industry would be wise to err on the side of caution, however, is with regard to how and when their projects enter the market.
On this note, the last word goes to Hotelier columnist and feasibility expert Guy Wilkinson, who advises against moving too fast.
“Falling room yields in most Middle East markets over the past two years mean hotels take longer to pay back, funding has been much more difficult to arrange and many people have started taking a longer-term perspective regarding their investments. Hotel developers will, therefore, continue to open new properties at a more measured pace, in my view, wherever it is in the region that they are planning new projects, and I would expect to see more delays and postponed openings. Bear in mind that hotels typically last a good few decades, so if one is being built as patrimony for the next generation – as effectively many are – what’s the hurry?”
Louise Oakley is the editor of Hotelier Middle East.
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