Middle East market not yet achieved ‘maturity’

The author of HVS International's Middle East Hotel Survey - Outlook, Market Trends and Opportunities has rejected speculation the region's industry may be reaching maturity after a strong performance across different markets in 2007.
Middle East market not yet achieved ‘maturity’
By Administrator
Tue 03 Jun 2008 04:00 AM

The author of HVS International's Middle East Hotel Survey - Outlook, Market Trends and Opportunities has rejected speculation the region's industry may be reaching maturity after a strong performance across different markets in 2007.

A hotel market is said to be in a mature phase when its general demand growth has stabilised, excessively high occupancy caused by overheated economies has peaked, and trends in average daily rates mirror CPI movements after years of dramatic increases.

Other signs of maturity include a full suite of hospitality asset classes and barriers to further development.

HVS director and report author Hala Matar Choufany said occupancy among quality hotels recovered to reach levels higher than in 2005.

"It is worth noting that after the drop in occupancy in Damascus and Bahrain in 2006, a fall due largely to political instability in the region, both markets registered a significant recovery, with occupancy averaging 80% and 77% respectively," she said.

"While the number of tourist arrivals worldwide grew by 6.1% between 2006 and 2007, in the Middle East growth was 13.2%, which clearly reflects the tourism industry's potential and its resilience to political shocks in the region.

"It remains the fastest growing region in terms of tourism arrivals, ahead of Asia and the Pacific region."

On average, hotels' gross operating profit grew by 21%, with GOPPAR rising from US $92 in 2006 to $111 last year.

Choufany also pointed to the influx of limited-service brands and alternative asset models such as timeshare and fractional ownership as an indicator the market still has plenty of blue sky remaining.

"Our general outlook for the hotel industry in 2008 and 2009 is positive, although with approximately 120,000 new rooms entering the different countries in the region, a market correction is likely to happen, with lower occupancy and a decline in average rates - especially in the UAE and Qatar - as the new supply is absorbed," she said.

"The long term outlook for the region as a whole remains positive, however, and the annual growth rate in certain markets is likely to slow over the next decade."

The report concludes: "despite continuing tension... we remain optimistic and expect hotel operating performances in general to experience another good year in 2008, assuming no significant upheaval in the region".

For all the latest travel 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.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.