Split performance in MENA

MKG Hospitality’s December and end-of-year hotel results for the Middle East & North African regions reveal Turkey, Kuwait and Saudi Arabia are easily the best performing markets. The GCC is recovering, while the rest of the region continues to struggle.

Turkey recorded the best growth in 2011 by far with RevPAR up by over 24%. A dynamic economy, as well as attracting the most spill-over demand from unstable countries in the region are the driving factors.

“Most of the GCC (excluding Bahrain, which has had its fair share of internal unrest) is clearly on the upturn, generally performing well and ending the year on a good note. No doubt, the GCC has benefited from the return of business and MICE tourism, intra-regional travel, as well as the consolidation in the supply boom,” said Director of Development, MKG Hospitality, Vanguelis Panayotis.

According to MKG Hospitality’s database, Kuwait proved to be the most resilient and consistent performer in the GCC during 2011, and the outright second-best performer in the entire forecasted area, ending the year with 8% RevPAR growth. This was driven by an increase in demand and a healthy business segment.

The UAE rebounded with 7.3% RevPAR growth in 2011, fuelled by results in Dubai, which managed to capture its in-season MICE tourism segments, as well as a good amount of leisure. The Kingdom of Saudi Arabia (KSA) also ends the year as one of the better performing markets with a 7% increase in RevPAR, driven by Riyadh and Jeddah. Meanwhile, Oman and Qatar managed to stabilize.

“These better results in demand are a good sign that the hotel cycle is turning for the better. However, there are also fears that 2012 will be an uphill battle, prone to the global economic slowdown, especially in key source markets Europe and North America,” Panayotis added.

In the rest of the region, namely North Africa and the Levant, negative results were to be expected for most – and assured – due to the geopolitical situation in the region. Bahrain and Egypt are the two worst-off locations, with RevPAR in 2011 declining by over 52% and almost 50%, respectively. Small signs of hope are appearing in some markets, such as Morocco, with the decline in RevPAR slowing down and demand almost stabilizing. Algeria, Lebanon and Jordan all saw better results in demand for the month of December; perhaps a sign that the cycle is also starting to turn.

“Even if stability in the region returns, and manages to convince traveller’s conscious, tourism and hoteliers are unlikely to enjoy full-fledge recovery. It will, however, be interesting to see if ultra-low packaged rates convince many to use this as an excuse for a cheaper holiday, and even more interesting to see just how 2012 results compare to the severely depressed figures in 2011,” Panayotis said.