Industry Intelligence
Around the region
A performance review of the region’s top cities, by Ali Manzoor, associate partner, development consultancy, Knight Frank
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he performance of the hospitality sector in the GCC was mixed in the first ten months of 2015, with some markets achieving year-on-year growth in RevPAR and others experiencing declines. In terms of supply, many hotel operators expect to expand their footprint over 2016 and the market will see the introduction of concepts not previously seen in the region.
Ali Manzoor
Abu Dhabi
Muscat The hospitality sector in Muscat had a subdued performance between January and October 2015, with both occupancy and average rate significantly below levels seen in the corresponding part of 2014. This dip was more apparent across luxury and upper upscale properties, while the mid-market segment – which is fairly well represented in Muscat – was less affected. This year saw the opening of the Millennium Executive Apartments; its strong performance to date is testament to the fact that the market was in need of internationally branded extended stay accommodation. Next year will see the opening of several new properties, including the Grand Millennium Muscat and the Kempinski the Wave with a combined total of over 600 keys.
with a strong likelihood of being delivered in 2016 includes the Indigo, Aloft, Hyatt Regency and Hilton Granada.
Dammam-Khobar Dammam-Khobar had a stable performance between 2014 and 2015, with little year-onyear change in RevPAR. The next high profile opening will be the Kempinski Al Othman hotel, which is due to open early in 2016. As with many other markets in the region, Dammam-Khobar has a large amount of upper upscale and luxury properties and is undersupplied in terms of quality mid-market and economy hotels.
Riyadh
Dubai
Despite several new hotel openings such as the Moevenpick Riyadh and the DoubleTree by Hilton Al Muroj, Riyadh’s RevPAR performance in the first 10 months of 2015 was similar to last year. While there are several projects due to be completed in 2016, perhaps the most interesting is the Nobu Hotel, located on King Fahad Road. Although hotel projects in Riyadh are notorious for being delayed, new supply
While the average rate fell by a fair amount in Dubai in the first ten months of the year, average occupancy was only marginally impacted. Despite this softening in key performance indicators, Dubai remains an attractive market for hotel operators, with average RevPAR levels significantly above most other cities in the Middle East. Over the coming year, several new properties are expected to be delivered in-
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cluding the Westin and W hotels, which will join the recently opened St Regis in Al Habtoor City. Other hotels in the pipeline include the Hard Rock Hotel in the delayed Marina 101 building, which will be the first of its kind in the region.
After a period of declining performance, the hotel sector in Abu Dhabi saw consecutive years of occupancy growth between 2012 and 2014, and this trend continued into 2015. In the coming years however, average occupancy levels are once again likely to face downward pressure as new supply gets delivered. Furthermore, the forthcoming supply is skewed toward upper upscale and luxury properties – such as the Grand Hyatt and Four Seasons which are both scheduled to open next year – signaling that the top end of the market is set to become increasingly competitive.
Ras Al Khaimah The hospitality sector in Ras Al Khaimah exhibited strong performance in 2015, and this trend is expected to continue over the coming year. One of the key success factors of hotels in Ras Al Khaimah is their ability to attract both domestic tourists from other emirates and inbound tourists from markets such as Germany and Russia. Predominantly a leisure market, the RevPAR growth seen in 2015 was fueled by an increase in rate, which is a reflection of the changing perception of Ras Al Khaimah as a leisure destination in its own right. Aside from the expansion of The Cove Rotana, which is currently underway, the next hotel due for completion in 2016 is the Santorini on Marjan Island.