THE REGION’S HOSPITALITY LANDSCAPE

Bahrain

The tourism sector is considered to be a strategic driver of the country’s non-oil economy. In 2016, Bahrain unveiled the Manama Gulf Capital of Tourism initiative, a collaboration between Bahrain Tourism & Exhibitions Authority, Tamkeen, Bahrain International Circuit and the Economic Development Board. This initiative is aimed at strengthening the development of two-way tourism between the GCC countries. Manama was selected as the ‘Capital of Gulf Tourism’, following a decision made by the GCC Ministers of Tourism last year. The initiative serves as the starting point for the Ministry of Industry, Commerce and Tourism to revitalize the tourism sector in the kingdom, hence paving the way for year-round events and activities. Historically, a majority of government tourism spending has been centered on hotels, restaurants and the nightlife of Hoora, Juffair and Adliya. Efforts are now being made to promote Bahrain as a family-friendly tourist destination. The government has been involved in promoting the development of several islands and resorts, such as Durrat Al Bahrain, Diyar Al Muharraq and Reef Island Development, in order to enhance the country’s lifestyle, seafront and cultural offering. To that end, the market is expected to see an influx of new hospitality supply, with 16 hotels, offering over 3,000 keys, in the development pipeline. Of the 16 hotels, six are slated to be resort destinations, including the One & Only Resort in Seef District, as well as the Fairmont Resort in Zallaq.

Egypt

After years of decline due to political unrest and warnings by European governments to its citizens restricting travel to the Sinai Peninsula, Egypt’s hospitality market has seen an upswing. Earlier in 2017, the Central Bank of Egypt announced an initiative to invest in capital improvements of hospitality assets, in which owners have been unable to invest over the past six years due to a persistent decline in tourist arrivals. Over this period, the Ministry of Tourism estimated that 50 percent of hotel facilities were closed, with the remaining operating at half capacity. According to a recent report by Industry Networks, there are approximately USD 5.3 billion worth of hospitality projects currently underway in Egypt, 70 percent of which are in the concept and design stage. Prominent projects include two properties from Emaar — The Address Hotel and Resorts in Cairo and Matrouh — as well as a Four Seasons Hotel in New Cairo. While key perdormance indicators (KPIS) across the key cities of Sharm El Sheikh, Hurghada, Alexandria and Cairo continue to struggle, an improvement in security, the opening of new airports — Sphinx International and Katameya International — and continued government efforts to improve bilateral relations should help lead the recovery of Egypt’s hospitality and tourism market.

Qatar

In response to the embargo, Qatar granted visas upon arrival to 80 nationalities, in order to counter the loss of visitors from KSA and the UAE, which represented 46 percent of arrivals in 2016. It remains unclear whether some or all of these feeder markets will compensate for the loss of the two high-yielding source markets. Prior to the embargo, revenue per available room (REVPAR) across Qatar hotels was on the decline, on account of an oversupply of hotels; sustained downward pressure on occupancy caused a further reduction in average daily rate (ADR). This can also partly be explained by the reduction in ADR witnessed among five-star properties, the lion’s share of market keys, as the premium they command over their four-star counterparts becomes less and less palpable for guests. Extending alcohol permits to four-star properties exacerbated the effect,

With geopolitical concerns and decreasing oil revenues leading to a slowdown in economic growth, expansion of hospitality and tourism continues to play an important role in efforts to diversify the regional economy. Exclusively for HN, EY’S

Qatar director, and Dubai’s manager, paint the region’s investments and developments patterns for the coming years

Without additional hospitality and tourism products breaking ground soon, we could find a market that is easy to travel to, but which lacks critical mass in terms of attractions to drive and sustain demand

albeit to the benefit of diversifying the hotel offering in the market. The strategy was to establish Qatar as a culture, heritage, sports and MICE destination, although current economics will likely make the strategy’s implementation challenging in the short term. With a proposed 60,000 hotel keys required by FIFA for the World Cup, a post-fifa legacy strategy will be critical to ensuring the sustained success of this substantial new hospitality infrastructure.

UAE

Dubai is leading the way in terms of arrivals, reaching 14.9 million visitors in 2016, well on the way to its target of attracting 20 million visitors by 2020. Growth in hospitality supply will continue to put downward pressure on rates; however, an increase in occupancy through demand from existing, as well as new source markets, will support the delivery of new products. Furthermore, declining REVPAR can, in part, be attributed to the increase in midscale products, with performance of luxury products still maintaining healthy, albeit moderated, profitability. In the coming years, northern emirates, including Ras Al Khaimah and Fujairah, are likely to witness growth in visitor arrivals, as the quality and diversity of hospitality supply increase.