HOTEL MARKET FORECAST 2022

Chris Lund, Executive Director – Head of Hotels, MENA, at Colliers rounds up the performance outlook for key hotel markets in 2022

At the end of the first quarter of 2022, Colliers expected most markets to improve on their yearon-year performance. However, increased geopolitical tension impacting key source markets and a rising price of oil is expected to shift demand patterns in the region.

While the ongoing monitoring of the COVID-19 pandemic by government entities and other key touristic stakeholders will continue to influence how markets recover, consumer confidence in source countries will be the principal determiner of continued growth. A transparent and consistent approach to the easing of COVID-19 restrictions to support further recovery and growth remains a key factor in improving consumer confidence in these key markets.

About Chris Lund

Christopher Lund oversees the hotels consultancy division of Colliers in the Middle East and North Africa. Over the past decade, the hotels team has worked on more than 800 projects and deals in the region, providing advisory services to hotel developers, investors, operators, governments, law firms and banks. Lund specialises in development consultancy and strategic asset management, ranging from standalone hotels to largescale destinations and portfolios, as well as hotel company strategies, condo-hotel investment models and negotiating complex hotel management agreements.

Forecasting methodology

The forecast for 2022 incorporates at least five years of seasonality and trends for each market and applies exponential smoothing to determine the likely trend for the coming year. This is then weighted against the entry of new supply, upcoming mega events and government-led intervention to derive the expected occupancy level for the market in 2022.

EGYPT ▼

New attractions in Cairo are expected to help attract visitation, along with the opening of new supply. The increased travel uncertainty from the key CIS markets is expected to have the largest impact on the Red Sea markets Sharm El Sheikh and Hurghada.

SAUDI ARABIA ▼

The Riyadh Season and growing consumer confidence has benefitted both the Riyadh and Jeddah markets, while positive indications on the return of pilgrim demand have improved the outlook for Makkah and Madinah markets. The rising price of oil has historically led to increased corporate demand in Al Khobar/ Dammam, so this is something we will monitor as the year progresses.

REGIONAL MARKETS ▼

At time of writing (March), COVID-19 restrictions had eased for inbound travellers to Jordan, including the lifting of PCR testing requirements. Given the large tour-driven demand in the market, this is expected to improve demand later in the year.

THE UAE ▼

Expo 2020 Dubai has had a positive impact on all markets in the UAE, while the FIFA World Cup Qatar in 2022 is expected to result in overspill demand to the key transit hubs in Dubai and Abu Dhabi. However, rising instability in key CIS source markets is expected to suppress demand, with the largest impacts expected in Dubai and Ras Al Khaimah. Given the diversity of the UAE’s source markets, additional hotel demand may be induced from alternative markets at a lower price positioning.

TOP PERFORMING HOTEL MARKETS 2022 V 2021 (OCCUPANCY)▼

QATAR ▼

Doha has maintained a high level of demand. Further improvement is anticipated this year with the FIFA World Cup Qatar expected to be a key driver in the final quarter of 2022.