Revenues at first-class hotels in the Middle East will fall further in 2002 and will only begin to recover sometime between 2003 and 2005. This is the forecast of a report released by the US' HVS International, based on a study of 108 luxury hotels with a total of 32,000 rooms across 10 countries in the region. Average occupancy rates fell to 64 per cent in 2001 compared with 68 per cent in 2000, a fall attributed mainly to global economic conditions, and the 11 September terrorist attacks deterring Western tourists from visiting the region. This declining demand coupled with an increase in the number of hotels pushed average revenue per room down 5 per cent to $84. HVS sees this trend continuing as further new hotel developments come on stream and regional instability persists.
However, the outlook is not entirely negative. Intra-regional travel made up for some of the decline in Western visitors, and the UAE, for example, recorded overall growth in tourist arrivals in 2001. Some of the losses sustained from lower average revenue per room were made up for by increased occupancy rates: in Muscat these climbed 7 per cent to 64 per cent and in Riyadh also increased slightly. Overall the study predicted no growth in the tourism sector for 2002, but expansion beginning again in 2003.