The first half of the year was a mixed bag for the hospitality and tourism sectors across the EMEA region. While inflation touched new highs, followed by interest rates, hotel performance levels held steady in many markets, indicating that international travel has been resilient and people are determined to travel, a recent study has revealed.
According to the latest edition of the EMEA Hotels Monitor by Whitebridge Hospitality, along with Rider Levett Bucknall and HotStats, every market benefited from the rise in RevPAR, excluding Doha (-1.7%).
In terms of RevPAR growth among the destinations in the region, Cairo led with +109.1%, which was driven by a sharp rise in ADR (more than +103%). GOPPAR in Muscat stood at +262%, despite a relatively modest rise in RevPAR (+28.6%).
Financing deals have become challenging, and such headwinds result in a slowing down of transaction volumes.
Construction cost inflation is easing, especially in Europe. However, giga-projects in Saudi Arabia are pushing costs upwards in the Middle East.
In terms of transaction terms, Spain and the UK emerged as the busiest markets, with several big and small deals taking place. The geographic spread of the deals was among the most extensive in recent years, with multiple deals across the CEE and Scandinavia regions.
PERFORMANCE TRENDS
The performance continues to grow in the Middle East. Major markets, like the UAE and Saudi Arabia, have posted 10% additional growth in revenue YOY, with improved profit margins of more than two percentage points.
F&B profits continue to dwindle in the UK and Northern Europe as costs stabilize, but revenue continues lagging behind inflation.
Energy costs in the previous quarter witnessed a considerable fall in consumption, driven primarily by seasonality and pricing.
Conferences and events have been positive but are still behind pre-pandemic levels, especially when adjusting for inflation.
HOTEL CONSTRUCTION COSTSÂ
Construction input cost increases have slowed in most countries, easing tender price inflation compared to levels seen in 2022. Currency fluctuations continued to significantly impact costs reported to a common currency.
While Dubai has seen a record number of new-build hotel construction projects, refurbishment and retrofitting projects continue to remain strong.
Construction activity in the hotel sector has been slow to recover in many markets and, therefore, is considered to be growing in these markets. Exceptions are Cardiff, Doha, Copenhagen and Durban.
BIG TRANSACTIONSÂ
East:
- Indotek Group’s acquisition of Jelsa Resort on Hvar Island, Croatia — The Jelsa Resort is a hotel complex consisting of two hotels and a resort and offering a total of 1,400 rooms.
- Szarvadi family’s acquisition of K&K Elisabeta in Bucharest, Romania — The 4-star, 67-room hotel, earlier known as K+K Elisabeta Hotel, was sold by InterGlobe for an undisclosed sum.
- Delta Real Estate’s acquisition of Radisson Collection Old Mill — Located in Belgrade, Serbia’s Delta Real Estate acquired the 236-room hotel for an undisclosed sum.
Middle East:
- QIA is in talks to acquire seven hotels in Egypt — Qatar’s sovereign fund has been in talks with the Sovereign Wealth Fund of Egypt to acquire seven historic hotels. QIA plans to acquire up to 30% stake in the hotels.
Corporates:
- Fondo Italiano d’Investimento acquires HNH Hospitality — Fondo Italiano and Eulero Capital signed an agreement to enter the capital of Italian hotel operator HNH Hospitality, acquiring a stake from the Siparex funds.
- Mutris acquired a 33% stake in Risma Hotels — Accor sold its 33% stake in the Moroccan hotel operator to Mutris as part of its asset-light strategy. Accor agreed to sell its stake at a price of AED 130 ($35.38) per share and then sell its Risma bonds on the market.
- PIF acquired a 49% stake in Rocco Forte Hotels — The Public Investment Fund, the Sovereign Wealth Fund of Saudi Arabia, acquired the stake in the luxury hotels group for a reported €1.3 billion ($1.64 billion).
- Blantyre Capital acquired Crerar Hotels Group — Blantyre, along with operating partner Fairtree Hotel Investments, acquired Scotland-based Crerar Hotels, whose portfolio includes seven luxury hotels.
Notable deals:
- Dubai Holding acquiring Le Richmond — Jumeirah Group made its entry into Switzerland with the acquisition of the historic boutique hotel in Geneva. The hotel features 87 rooms and 22 suites and will undergo renovations to reopen as an ultra-luxury hotel in 2025.
- Hyatt acquiring Mr & Mrs Smith — Hyatt agreed to acquire the London-headquartered travel club and hotel booking service for £53 million ($67.2 million).