Rising to the challenge

22 March 2017

Hoteliers are facing some of the most testing market conditions they have ever experienced

From the constant barrage of upbeat announcements about the latest luxury hotel openings, new themes parks and record-breaking airline deals, you would be forgiven for thinking that everything is rosy in the region’s hospitality sector. It isn’t.

Hoteliers are facing some of the most testing market conditions they have ever experienced as a slowdown in business activity erodes demand at the same time as new hotels are increasing supply.

Although Middle East hotels are still among the highest priced in the world, with room rates averaging about $175 a day in 2016 (second only to the Caribbean), revenues are falling sharply.

Read MEED’s special report on the development of leisure and entertainment industries, Iran’s emergence and the next-generation travel trends that hoteliers and hospitality experts need to know about. Explore a visual key to hotel performances across the region

According to data from industry analyst STR Global, the average revenue per hotel room in the Middle East and North Africa region fell 8.3 per cent in 2016, while average daily room rates fell 5.7 per cent and occupancy levels dropped 2.7 per cent.

The short-term challenges vary from market to market, with GCC hoteliers affected by the slump in oil prices, while Egypt’s hospitality sector has been hit by security fears.

But the challenges from increased competition and the disruptive influence of new technology, whether from online travel agents or Airbnb, are structural and can only be addressed by changing.  

That is why the theme of this year’s Arabian Hotel Investment Conference (Ahic), the region’s most important gathering of hoteliers, is Catalysts for Change.

From hotel owners and investors through to operators and suppliers, industry stakeholders must work together to reinvent their offerings and services to drive demand and to protect their incomes. 

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