AHIC 2015: Colliers warns of challenges ahead

Discussions today at AHIC

Leading hospitality industry investors, operators and professionals attending the Arabian Hotel Investment Conference have gained a valuable insight into the performance and outlook of the MENA hotel market from Filippo Sona, head of hotels for Colliers International in the MENA region.

Sona’s presentation on the Colliers International MENA Hotel Market Forecast, a leading resource for industry decision makers, explored the dynamics driving current performance and future expectations across the region.

Commenting after his well-attended session, Sona said: “There are a number of powerful factors currently shaping the MENA hospitality market.

“I hope that our analysis, based on the breadth and depth of our understanding of the market, will provide a solid basis for budgeting and pricing strategies in the coming months.”

During his session, Sona highlighted the key opportunities and challenges that the industry will face over the next 12 months, with Dubai, Abu Dhabi and a resurgent Egypt highlighted as key markets to watch.

RevPar across Dubai’s districts is anticipated to remain static or witness a small decline of up to two per cent by year-end owing to the size of the assets coming online coupled with the promotional rates that operators are offering to attract MICE visitors.

This in turn is compressing overall room rates in the emirate, applying pressure to RevPar.

Commenting on Dubai’s outlook Sona said: “While Dubai’s hotel market is going through a period of adjustment, it still retains its position as one of the world’s leading tourism destinations, and occupancy and Average Daily Rates remain at a strong level.

“With a number of major tourism and leisure projects due to be released in the coming year, such as Dubai Parks, a readjustment in the market and double digit growth is expected to return in the near future.”

According to the report, Abu Dhabi Beach and City districts will experience positive growth by year-end of three and two per cent respectively, as major tourism, leisure and cultural developments including Saadiyat Island, Yas Waterworld and The Louvre Abu Dhabi entice tourists to visit and lengthen their stay in the capital.

This, coupled with Etihad’s recent expansion of routes, will see the city gain in momentum.

“The positive outlook is a result of Abu Dhabi Tourism’s efforts to differentiate the city and its market offering.

“The demand generators that we have seen enter the market recently have all contributed to the overall brand equity of Abu Dhabi.

“We expect new supply to be absorbed by the market which will help Abu Dhabi go from strength to strength,” Sona said.
Given the popularity of Egypt among Russian tourists, the return of socio-political stability and increasing consumer confidence in Egypt, the country’s three key tourism cities are expected to see the largest increase in RevPar by year-end, with Cairo, Luxor and Sharm El Sheikh expected to increase by 28 per cent, 33 per cent and ten per cent respectively.

“Egypt is coming back in a big way following a tough period for the industry.

“The country is on a major drive to attract investment and the hospitality industry, traditionally one of the key sectors of the economy, is no exception.

“The numbers are impressive and reflect a sharp upturn in sentiment as tourism spending reached EGP 153 billion last year, the highest level since 2008,” Sona concluded.