The hospitality sectors in Dubai, Abu Dhabi, Doha, Jeddah, Muscat and Riyadh are all expected to strong growth through the coming years, driven by megaevents and an improving regional economy.
In its first Middle East hotel forecast, PwC anticipates growth in revenues per available room (RevPAR) across all of the six featured cities in 2014 and 2015.
The only exception across all metrics is ADR growth in Riyadh which is forecast to be marginally negative, although the rate of decline is slowing.
Commenting on what’s driving growth, Viren Lodhia, hospitality and leisure lead partner at PwC Middle East, said; “Travel to the Middle East is expected to grow strongly over the next 10 years, with the region’s strategic location and investment in airports and infrastructure, establishing it as an important Global Hub.
“Combining this with future Mega Events being held in the region and an emergence as a magnet for both MICE and shopping travelers, provides for a wealth of opportunities for both hotel operators and owners”.
The top RevPAR growth stories in 2014 are Muscat (6.6%), closely followed by Dubai (6.5%) and Doha (5.2%), where growth in average daily rates (ADR) will be the principle performance catalyst. In 2015 this RevPAR growth is forecast to continue with Muscat and Dubai continuing to grow at 6.6% and 6.5% respectively and Doha forecast to grow at 5.4%.
Meanwhile, occupancy will be the principal driver behind 2014 RevPAR growth forecasts for Riyadh (3.5%), Jeddah (4.1%), and Abu Dhabi (4.7%), with low growth forecast in ADR’s.
The six cities represent over 124,000 hotel rooms and have seen high levels of new supply added in recent years with more scheduled to open.
This poses a threat to RevPAR performance, as supply could outstrip demand as seen in a monthly performance report from Dubai earlier in the year. However, growth mega events is driving room demand through the medium term and mitigating the threat of oversupply.
In Qatar, 45,000 further hotel rooms are reported to be required to meet FIFA World Cup capacity requirements, with 21 hotels planned for construction by 2017.
In Dubai, The Department of Tourism and Commerce Marketing estimate a need for between 140,000 to 160,000 new rooms by 2020, with a further 10,000 plus rooms being reported as needing refurbishment prior to the Expo2020
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