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Middle East hotel sector outpaces Europe and Asia-Pacific with 17 per cent growth

By Shweta Jain


The Middle East hotel sector recorded 17 per cent growth in revenue per available room (revPAR) in 2007, exceeding both Asia-Pacific and Europe, according to the HotelBenchmark Survey by Deloitte & Touche, a professional services firm providing audit, tax, consulting and corporate finance services.

Last year was also the fourth year of double-digit revPAR for the region’s hotels. The increase in Middle East hotel revenue and occupancy rates was led by Jordan, Oman and Egypt, according to Deloitte. The daily revenue per available room increased 17 per cent in the region to reach $107 (Dh393), Deloitte said.

Whereas, the average room rates increased 11.4 per cent to $151, and occupancy increased five percentage points to 71.6 per cent.

Muscat scored the strongest growth in the region with its revPAR surging 53 per cent to $152, according to the survey.

But while Oman and Egypt were the winners in terms of growth, Dubai continued to achieve the highest absolute occupancy and average room rates at 84.2 per cent and $283, respectively, last year. Dubai’s hotel occupancy increased from 83 per cent in 2006 and the average room rate from $249.

“Hotels in the Middle East have growth rates that hoteliers in other parts of the world can only dream about. Muscat, for instance, has seen a 52.8 per cent increase in revPAR and Dubai hotels have occupancy rates of almost 85 per cent,” said Rob O’Hanlon, Tourism, Hospitality and Leisure Partner for Deloitte Middle East. “This amazing hotel performance is bound to continue as analysts suggest that annual travel and tourism revenues could increase almost 90 per cent over the next 10 years. With many groundbreaking projects coming to fruition, such as The Palm Jumeirah, 2008 should be a fantastic year,” he added.

Abu Dhabi hotels, on the other hand, experienced occupancy levels of 78 per cent in 2007, with an average room rate of $215 per day. The capital’s revPAR, meanwhile, increased by almost 22 per cent to reach $167.

Across the Middle East there were stark contrasts in performance, according to Deloitte. Jordan, Oman and Egypt were the true success stories, as per the survey. Jordan, after experiencing a slight fall in revPAR in 2006, saw a change in fortunes in 2007.
RevPAR was up 19 per cent in Amman following a stable recovery from the 2005 terrorist attacks.

The survey reveals the success was not just limited to Amman, as the ancient stone-carved city of Petra was declared one of the ‘New Seven Wonders of the World’. According to the Jordan Tourism Board, tourist arrivals to Petra increased by 43 per cent during the first 11 months of 2007 to just over half a million. The government is focusing on niche markets including the meetings, incentives, conventions and exhibitions market, as well as adventure tourism and religious travel.

The boom in Oman continued throughout 2007 as demand for hotel rooms continued to exceed supply, resulting in the strongest revPar growth in the region. The leisure destination is investing heavily in long-term tourism and infrastructure. Room capacity in Oman is expected to double by 2012 and several mixed development tourism projects are in the pipeline that include hotels, marinas, shopping centres, golf courses and exhibition centres, according to the Deloitte survey.

In Egypt’s Sharm El Sheikh, which suffered terrorist attacks in both 2005 and 2006, revenue per available room grew 30 per cent last year, to $44, owing to a further increase in average room rates of 10.8 per cent to $58. The popular holiday destination saw the strongest growth with occupancy increasing 17.5 per cent to 76.5 per cent.

However, there are a couple of destination in the Middle East that did not have such a great year. RevPAR in Beirut, for instance, fell 27.5 per cent to $47 in 2007. Continued political instability is presenting challenges to the tourism industry and as a result a number of new hotels due to open in Beirut have been put on hold, according to the survey.

“Overall, the Middle East saw revPAR grow faster in 2007 than it did in 2006 by 2.4 percentage points. This is a great achievement for the region given the amount of new supply entering the market. With the continued level of investment in infrastructure and marketing campaigns, the outlook for tourism in the Middle East looks promising for the year to come,” said Lorna Clarke, Executive Director of HotelBenchmark at Deloitte.