Posted on June 11, 2015

According to EY’s Middle East Hotel Benchmark Survey Report, a hospitality performance review of five and four-star hotels, Cairo, Beirut and Doha performed most strongly in Q1 2015, despite the sustained drop in oil prices.

Yousef Wahbah, Partner and Head of MENA Transaction Real Estate, EY says: “In the MENA region, Cairo, Beirut and Doha’s hospitality markets in particular witnessed robust growth in Q1 2015. This demonstrates continued political stability in the region and greater confidence amongst tourists of the current security situation. Q1 is also typically peak tourism season for the region due to milder weather. The hospitality sectors in these markets consequently witnessed an increase in conferences and events during this period.”

Cairo led the region in hospitality performance in Q1 2015. Its RevPAR increased significantly by an impressive 106.6% due to an increase in both the average room rate and occupancy. Average room rate increased from 76 in Q1 2014 to 103 in Q1 2015 and there was a 16% increase in overall occupancy rate, reaching 46% in Q1 2015 up from 30% in Q1 last year. This increase could be credited to the growing political stability as well as the recent uptick in the economic activity of the country.

Following Cairo, Beirut witnessed a 46.5% increase in RevPAR in Q1 2015 due to a 14% increase in overall occupancy and an 8% increase in average room rate compared to Q1 2014. Leading the GCC, Doha’s RevPAR increased by 22.2% compared to the first quarter of last year. Hotel rates increase from US$204 in Q1 2014 to US$167 in Q1 2015. This was mainly due to the 11.5% increase in ADR and a growth in occupancy from 69% in Q1 2014 to 76% in Q1 2015.

April 2015 hotel performance

Hospitality markets in Cairo, Madina and Beirut witnessed a positive increase in April 2015. Cairo continued to witness a double digit increase in RevPAR of 78.7% in April 2015 when compared to the same period last year. This was mainly due to the increase in average occupancy from 35.0% in April 2014 to 49.0% in April 2015 due to the Easter break holidays.

In April 2015, Madina and Beirut saw a rise in RevPAR of 36.9% and 12.3% respectively compared to the same period last year. This was mainly due to the increase in average occupancy from 51.0% in April 2014 to 56.0% in April 2015. Jeddah and Riyadh’s hospitality market performance dropped when compared to the same period last year, witnessing a decrease in RevPAR of 9.0% and 9.5% respectively in April 2015 as compared to April 2014.

Qatar Airways DC

Hotels across Dubai witnessed a decrease in RevPAR by 12.5% in April 2014 when compared to April 2015. The city maintained a healthy occupancy of 84.2% in April 2015 as compared to 85.4% in April 2014, however the drop in ADR from US$326 in April 2014 to US$289 in April 2015 accounted for the drop in the overall performance of the market. The overall hospitality market in Dubai has seen a softer performance with the hotels dropping room rates in order to maintain their occupancy levels.

Abu Dhabi’s hospitality market witnessed a positive increase in all key performance indicators in April 2015 with occupancy increasing from 84.0% to 86.0% in April 2015. The surge in occupancy was coupled with a significant rise in ADR from US$220 in April 2014 to US$236 in April 2015, which resulted in an increase in RevPAR of 9.1% in April 2015 when compared to the same period last year. The increase in occupancy was attributed to Cityscape Abu Dhabi. “It is clear that a number of key markets are still demonstrating stable growth in their hospitality sectors despite the drop in oil prices. However as we move into the summer months and hotter weather, occupancy rates are expected to gradually decrease across the region,” explained Yousef.

Dubai, for example, has already witnessed a slight decline in 2015, with a drop in RevPAR of approximately 6.4% in Q1 and 12.5% in April 2015. The market is likely to be further impacted by a decrease in travel from Russia and Europe, given the weaker Ruble and Euro. This should be offset by an increase in travel from emerging markets such as India and China, which are benefiting from sustained lower oil prices and increased purchasing power. “Overall, the growth in the number of visitors to the region is expected to keep pace with hotel room supply.  This is due to a number of factors, including an increasing demand for enhanced medical tourism, theme parks, retail outlets and current preparations that are underway for the FIFA World Cup 2022 and Dubai Expo 2020,” comments Yousef.

Hotel performance in EY’s Middle East Hotel Benchmark Survey Reports is measured using several indicators, including revenue per available room (RevPAR), occupancy rates and average room rates. It covers hotel markets in selected countries and cities in the Middle East on a monthly and year-to-date basis.