Middle East records decline in hotel revenue

28 October 2015

Supply of new rooms is outpacing demand

The Middle East and Africa has seen a 1.1 per cent decline in revenue per available room (RevPAR) in 2015 to date, compared with the same period in 2014, according to Philip Wooller, area director for the Middle East & Africa for STR Global, speaking at MEED’s Oman Projects Forum on 28 October.

Supply is outpacing demand in the region, putting pressure on occupancy levels and room rates for branded three to five star hotels.

“The key number is demand, and across region it is very strong,” says Wooller. “There is just a bit of disconnect with supply.”

Supply across the region increased 4.8 per cent year to date, with demand growth lagging at 4.1, according to STR Global figures. This is especially an issue in the UAE and Qatar. Doha has 70 hotels under construction, with potentially up to 110 hotels in the pipeline, although some are unconfirmed.

Dubai has seen its RevPAR fall more than 7 per cent so far in 2015, and could fall further before the end of the year.

Muscat has seen a fall in RevPar of 13.7 per cent year to date. Supply for the whole of Oman country has increased by 11.7 per cent year-on-year. While the market outside Muscat has held up, the capital has seen occupancy rates fall by 6 per cent year-on-year and average room rates fall by 7 per cent.

However, demand remains strong, with rooms sold up 10.7 per cent through the year to date, compared to the same period in 2014. Gross profit from hotel rooms was up between 6 and 7 per cent in 2014, compared to 2013.

Oman has 5,000 rooms in the pipeline, compared to 10,000 branded three to five star hotel rooms already in the market.

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