The combined development of hotels in the Middle East and Africa illustrate a compound growth rate of 7.6% from March 2014 – 2015 according to recent data published by STR Global.
Highlighting the strong performance in the burgeoning hospitality sector across both regions, the report revealed there were 626 hotels under development, providing 147,680 rooms, suggesting an increase in confidence in capacity building both tourism and cross-border business.
Leading the most development intensive region was Dubai, boasting 49 hotels and 14,385 rooms under development during the same period. The GCC continued to represent the fastest developing destinations with Doha, Qatar, Makkah KSA and Riyadh, KSA occupying the top four places.
According to recent data, Dubai’s rapid hotel development has meant lower than expected occupancy rates for the existing hotel market despite a positive purchasing manager index of 58.1 in February. Robust infrastructure spending has supported both Qatar and KSA with Qatar committing $200bn in infrastructure spend in order to meet the capacity and standards necessary to host the FIFA World Cup in 2022, and KSA’s King Salman confirming a supplemental spending programme of $29bn after his accession to the throne earlier this year. Other GCC spending commitments include Kuwait’s five year $115bn spending plan which will be aimed to increase the pace of its national development.
Speaking about the sector, Chiheb Ben Mahmoud, head of hospitality at JLL MENA commented in a recent press release; “The hotel sector continued to face competition in the first quarter of the year. The increase in supply on one hand and the perceived softness of the inbound travel market on the other are leading some hotels to review their pricing and revenue management strategies. While occupancy rates remain healthy at 86% and above the MENA average, RevPARs declined 11% to USD 234 over Q1 2014. Visitor trends in the tourism market are changing with the stronger U.S. dollar, which is a detractor for Russian and Eurozone tourists, and evolving consumer habits in emerging markets, which is resulting in higher guests from South Asia, Far East Asia and Africa.”