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The Middle Eastern Hotel Sector - May 2011

  • Recent and ongoing civil unrest has severely impacted the hotel performance in much of the region, including Bahrain, Egypt, Lebanon, Syria and Yemen, in particular. However, the UAE, which is considered to be a safe haven, is seen to be benefiting from the crisis gripping much of the region.
  • The Saudi Arabian hotel market is being buoyed by soaring energy prices and a significant level of domestic demand, as compared to other countries in the region.
  • Putting aside the present political turmoil, the Syrian market presents the best prospects for hotel investment in the region in the medium term, due to growing inbound business and leisure tourism and an outlook for controlled supply growth.
  • Qatar and the major UAE markets of Abu Dhabi and Dubai present major supply risk due to overbuilding and the large number of rooms in the pipeline, which is likely to outstrip demand by a wide margin for the foreseeable future.
  • Of the major international chains, InterContinental Hotels Group (IHG), Accor, Hilton and Starwood have the strongest presence in the region. Hilton’s portfolio is particularly weighted towards Egypt, while IHG has a heavy concentration in Saudi Arabia and the UAE. Meanwhile, Starwood has a reasonably well-balanced portfolio across the region, with, nevertheless, significant capacity in the UAE.
  • Most of the regional hotel investment companies and chains, such as Kingdom Hotel Investments, Jumeirah Hotels and Resorts, Qatar National Hotels Company and Nakheel Hotel & Resorts have been obliged by the crisis to substantially cut back on expansion activities and, as has been the case of the latter, have had to go through substantial financial restructuring.
  • Abu Dhabi-based Rotana Hotels & Investments, due to astute management and an asset-light structure, has prospered and continued to expand at a healthy pace.
  • There exist good opportunities for developing economy, limited service and extended-stay properties throughout much of the region and even in the saturated markets of Qatar and the UAE.

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Table of contents

  1. Introduction

      • Key findings
      • Data Sources

        • Overview

            • Outlook for spending on travel and tourism
              • Figure 1: Spending on travel and tourism in the Middle East*, 2011-21
            • Recent trend in Middle Eastern hotel performance
              • Figure 2: Hotel performance in selected Middle Eastern country markets, 2009-10
            • Abu Dhabi in free fall
              • Figure 3: Hotel performance in selected Middle Eastern urban markets, 2009-10
          • Individual Country Hotel Markets

              • Bahrain
                • Figure 4: Hotel rooms in Bahrain, 2004-08
              • Occupancy and rate rebounded in 2010
                • Strong pipeline
                  • Figure 5: Hotel pipeline for Bahrain, 2011
                • Egypt
                  • Figure 6: Inbound overnights in hotels and similar establishments in Egypt, 2005-09
                • Three major hotel markets
                  • Figure 7: Performance of the major hotel markets in Egypt, 2009-10
                • Impact of protests
                  • Cairo hard hit by unrest
                    • Jordan
                      • Figure 8: Inbound guests and overnights in hotels and similar establishments in Jordan, 2005-09
                    • Transport infrastructure improvements
                      • Government measures to support hotel sector
                        • Heavy weighting towards upscale in Amman
                          • Kuwait
                            • Figure 9: Inbound guests and overnights in hotels and similar establishments in Kuwait, 2005-09
                          • Lebanon
                            • Figure 10: Inbound overnights in hotels and similar establishments in Lebanon, 2005-08*
                          • Arabs are leading source market
                            • Explosive performance in 2009
                              • Beirut recently impacted by political instability
                                • Lebanon in ‘hotel bubble’?
                                  • Supply outlook
                                    • Most lodging segments still underserved
                                      • Infrastructure improvements needed
                                        • Oman
                                          • Figure 11: Inbound overnights in hotels and similar establishments in Oman, 2005-09
                                        • Steady growth in capacity
                                          • Figure 12: Hotel rooms in Oman, 2005-09
                                        • City Seasons opens first hotel in Oman
                                          • Salalah Marriott Resort
                                            • A full pipeline
                                              • Figure 13: Hotel pipeline for Oman, 2011
                                            • Qatar
                                              • Figure 14: Inbound guests and overnights in hotels and similar establishments in Qatar, 2004-08*
                                            • Four-star segment has benefited
                                              • Outlook for demand growth
                                                • Diversification and infrastructure projects to drive demand
                                                  • Positioned as a stopover destination
                                                    • A new airport
                                                      • Population growth
                                                        • Targeting study, sports and culture tourists
                                                          • Hotel performance has suffered
                                                            • Major supply risk on the horizon
                                                              • Figure 15: Hotel rooms in Qatar, 2004-08
                                                            • Current supply
                                                              • Figure 16: Hotel chain presence in Doha, 2011
                                                            • Future supply
                                                              • Figure 17: Recent quality hotel openings and active pipeline in Qatar, 2011
                                                            • Saudi Arabia
                                                              • An attractive consumer market
                                                                • Business travellers and pilgrims
                                                                  • Figure 18: Inbound guests and overnights in hotels and similar establishments in Saudi Arabia, 2004-08
                                                                • Infrastructure development – a potential demand driver
                                                                  • A new hotel grading scheme
                                                                    • The Riyadh hotel market
                                                                      • Average length of stay
                                                                        • Performance correlated to oil prices
                                                                          • Figure 19: Performance of major hotel markets in Saudi Arabia, 2009-10
                                                                        • Hotel stock
                                                                          • Jeddah
                                                                            • The summer capital
                                                                              • Potential for beach tourism?
                                                                                • Recent performance
                                                                                  • Other Saudi cities
                                                                                    • Hotel pipeline
                                                                                      • Figure 20: Hotel pipeline for Saudi Arabia, 2011
                                                                                    • Syria
                                                                                      • An improved investment climate
                                                                                        • Attractions
                                                                                          • Figure 21: Inbound guests and overnights in hotels and similar establishments in Syria, 2005-09
                                                                                          • Figure 22: Breakdown of hotels and guests by grade of accommodation in Damascus, 2011
                                                                                        • Existing supply and pipeline
                                                                                          • Figure 23: Existing supply of internationally branded hotels – Damascus, 2011
                                                                                          • Figure 24: Branded hotels pipeline, confirmed supply – Damascus, 2011
                                                                                        • United Arab Emirates
                                                                                          • Europe the largest source
                                                                                            • Recent performance trends
                                                                                              • Figure 25: Performance of major hotel markets in UAE, 2009-10
                                                                                            • Pipeline
                                                                                            • International Chains in the Middle East

                                                                                              • Accor
                                                                                                • Figure 26: Accor’s Middle Eastern hotel portfolio, 2011
                                                                                              • Almost 5,000 rooms in the pipeline
                                                                                                • Economy and midmarket brands for UAE
                                                                                                  • Fairmont Hotels & Resorts
                                                                                                    • Figure 27: Fairmont hotels in the Middle East, 2011
                                                                                                  • Hilton
                                                                                                    • Figure 28: Hilton’s Middle Eastern hotel portfolio, 2011
                                                                                                  • Saudi Arabia and UAE targeted
                                                                                                    • Figure 29: Hilton’s pipeline of new hotels in the Middle East, 2011
                                                                                                  • IHG
                                                                                                    • Figure 30: IHG’s Middle Eastern hotel portfolio, 2011
                                                                                                    • Figure 31: IHG’s Middle Eastern hotel pipeline, 2011
                                                                                                  • Marriott Hotels & Resorts
                                                                                                    • Figure 32: Marriott’s Middle Eastern hotel portfolio, in number of hotels, 2011
                                                                                                    • Figure 33: Marriot’s Middle Eastern hotel pipeline, 2011
                                                                                                  • Mövenpick
                                                                                                    • Premier Inn
                                                                                                      • 50 hotels in ten years?
                                                                                                        • Figure 34: Marriott’s Middle Eastern hotel pipeline, 2011
                                                                                                      • Rezidor
                                                                                                        • Figure 35: Rezidor’s Middle Eastern hotel portfolio, 2011
                                                                                                        • Figure 36: Rezidor hotel properties under development in the Middle East, 2011
                                                                                                      • Starwood Hotels & Resorts
                                                                                                        • Figure 37: Starwood’s hotel portfolio and pipeline, 2011
                                                                                                    • Regional Hotel Groups

                                                                                                        • Jumeirah
                                                                                                          • 60 properties by 2012 – a pipe dream?
                                                                                                            • Kingdom Hotel Investments
                                                                                                              • Qatar National Hotels Company (QNH)
                                                                                                                • Rotana Hotels & Resorts
                                                                                                                  • Figure 38: Rotana’s hotel portfolio, 2011
                                                                                                                • Seven new properties in the Middle East and Africa
                                                                                                                • What Next?

                                                                                                                    • US$6-billion hotel projects by 2013
                                                                                                                      • Risk of oversupply?
                                                                                                                        • Major chains leading pipeline growth
                                                                                                                          • Still potential for budget and midscale hotels

                                                                                                                          Companies Covered

                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                          The Middle Eastern Hotel Sector - May 2011

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