MORE FOCUS ON LONG-TERM PLANNING

Philip Wooller

Middle East & Africa, STR decline in corporate travel, and there are currently many promising developments. By 2030, the region is expected to have further transitioned from its established commoditydriven nature into more of a service economy, with tourism playing a key role. This diversification should further improve the region’s fiscal stability and sustainability. Early adopters that have already invested more in the tourism sector should already be seeing results in their local economies and general business environments, likely setting them up for success by 2030. Looking at KSA, the Red Sea beach resort project could help balance the market’s seasonality and stimulate leisure arrivals, helping the kingdom benefit from some of the same types of inbound tourism the UAE has seen in Dubai. Turning to other long-term investments, Makkah is also going through a major supply expansion, which should help further develop the market’s infrastructure to better accommodate the millions of visitors it receives each year. As part of Saudi Arabia’s Vision 2030, these initiatives should open KSA to more foreign investment and help the country’s tourism and hotel industries continue growing. In Dubai, the massive supply build-up to the Expo 2020 and beyond continues to weigh on the market’s performance, although demand remains quite strong. Despite the recent supply growth, Dubai’s occupancy was up slightly (+0.3 percent) for the yearto-date September period. Average daily rate (ADR), however, was down 4.6 percent, showing how the market’s landscape has reacted to the additional rooms available. It’s interesting to note that the market is not just growing larger in size, but also in types of offerings available. Much of the new supply to come online over the past two years has been in the midscale segment, while historically, the upper-tier hotel classes were the norm. Although we’ve seen rates come down a bit, this addition of rooms at varying price points appears to be helping the market attract a wider range of visitors on different travel budgets.