Dubai, Saudi Arabia up, Egypt down

While Dubai and Saudi Arabian hotels are seeing strong growth, Egypt’s continue to see declines in demand while margins in Abu Dhabi are hurt by increased supply, according to TRI Hospitality Consulting’s HotStats MENA market review for September 2011.

In Dubai, United Arab Emirates, strong recovery in demand this year — 78.6% occupancy compared to 71.8% in September 2010 — prompted hoteliers to increase rates by 10.9% in September, resulting in a 21.5% growth in RevPAR and a 24.6% growth in GOPPAR for the month. Dubai hotels’ year-to-date GOPPAR of US$110.10 is 30.9% higher than its neighboring city of Abu Dhabi and second only to Riyadh amongst the six cities covered in the market review.

“Dubai hotels have clearly benefited from the Arabic Spring and such trend is unlikely to change until there is greater stability in the hot spot areas of Egypt and Syria,” said Peter Goddard, managing director of TRI Hospitality Consulting in Dubai.

In Abu Dhabi, United Arab Emirates, however, things appear to be moving in a different direction. Hotels in this emirate continued to see room rates (ARR) drop, with a 7.0% decline in September. “The continued growth in supply, albeit at reduced levels compared to the last couple of years, is likely to maintain the pressure on rates and increase the risk of oversupply in Abu Dhabi in the short to medium term,” said Goddard.

Meanwhile in Egypt, Cairo, which has been the center stage of the Egyptian revolution, saw its hotel occupancy drop by 22.8% while Sharm El Sheikh registered a decline of 15.9% in September compared to last year.

In Saudi Arabia, Riyadh has clearly taken the lead and saw its hotel occupancy grow by 18.7 percentage points, RevPAR go up by 52.6% and GOPPAR surge by 91% in September compared to the same month in 2010. On the other hand, Jeddah’s growth has been strong but modest when compared to Riyadh, posting a 10.4% growth in TrevPAR and 11.8% growth in GOPPAR for the month.