Mena hotels sector endures summer lull

Decline in business travel during summer to impact market in region, report states

The hospitality market in the Middle East and North Africa (Mena) is expected to continue seeing a drop in performance indicators over the summer as business travel declines.

According to the latest report from advisory EY on the Mena’s hotel market, the number of conferences being at a minimum during the summer is also expected to keep business travel low.

The outlook for continued declines comes as most fourand five-star hotels in the Middle East saw a drop in occupancy rates, average room rates, and revenues per available room in May 2018 compared to May 2017. In Dubai, occupancy rates declined in May by 16.4 percentage points to 60.9 per cent compared to 77.3 per cent in May 2017.

Average room rates in Dubai were little changed, however, falling 0.7 per cent to $236, but resulting in a 21.7 per cent decline in revenue per available room, which fell to $184.

“Due to Ramadan beginning in mid-May this year and the onset of the summer season, the overall decline in performance in the region is unsurprising. Saudi Arabia, however, benefitted from the large influx of pilgrims during the holy month,” said Yousuf Wahbah, Mena real estate, hospitality, and construction sector leader at EY.

Over two million pilgrims are expected to have visited Saudi Arabia, resulting in an increase in performance indicators such as occupancy rates across Makkah, Madinah and Jeddah, with declines only in Riyadh, EY said in its report.

Abu Dhabi shines

In the region, it was Abu Dhabi that saw the highest increase in occupancy rates, which rose 8.9 percentage points to 76.7 per cent in May compared to 67.7 per cent in the same month last year.

Meanwhile, Jeddah recorded the highest average room rate in the region, at $351 in May, resulting in the highest revenue per available room of $259. Room rates were up 19.5 per cent year-on-year, with occupancy there inching up 2.2 percentage points to 73.7 per cent.