Dubai Hotels Thriving Despite Weakness Of Middle East/Africa Region

Online, February 9, 2012 (Newswire.com) - Dubai's hotel sector posted a strong performance for 2011, which bucked the generally negative trends in the MiddleEast/Africa region for hotel occupancy, according to London-based consultancy STR Global.

In its analysis of the hotel industry worldwide, STR Global, the leading provider of market data to the hotel industry, said the Middle East/Africa region reported a 6.8-percent decrease in occupancy to 57.1 percent, a 5.3-percent increase in average daily rate to US$162.81 and a 1.8-percent decrease in revenue per available room to US$92.99.

But Dubai's hotel industry is thriving. Dubai was the only tourist destination in the region to witness both a rise in occupancy and RevPar, of 4% and 4.5% respectively. The STR Global report also showed that there were 13,349 hotel rooms being built, which is more than the combined total of the next four largest hotel markets in the Middle East/African region - Abu Dhabi, Riyadh, Cairo and Amman.

Great news for investors
Dubai's performance represents a remarkable upsurge since its hotel market slumped after the global financial crisis. Dubai's hotel occupancy in 2009, for example, recorded a decline of 10.2 percent because of decline in business activities.

Now after years of insecurity, STR Global predicts that 2012 will be another year of growth. The rise in demand should help Dubai's many new hotel developments, such as The First Group's two prestigious hotel apartment projects in Tecom; Metro Central and Grand Central, which are situated in the bustling business district of Tecom in the heart of "New Dubai".

Such high-end development are attractive to investors as the Luxury end of the market did particularly well last year, soaring 17.6 percent. Moderate new hotel supply (+9.4 percent) resulted in high average room rate growth of 3.1 percent.

The performance of Dubai's hotels in 2011 was linked to its reputation in the region as a safe haven during the Arab Spring. The Arab Spring had a severely negative effect on hotel occupancy in some African countries. In Egypt, for example, there was a 38% decrease in occupancy.

Asia/Pacific region fares well
The hotel industries in other regions of the world fared better as a whole than the Middle East/Africa region if we exclude Dubai's exceptional performance.

In the Asia/Pacific region, for example, the industry saw positive, according to data compiled by STR Global. Although the Asia/Pacific region's occupancy saw only a 0.2-percent increase to 66.8 percent, its average daily rate rose 9.5 percent to US$140.44 and revenue per available room was up 9.8 percent to US$93.84.
Bangkok, in Thailand, experienced the largest occupancy increase, rising 17.6 percent to 63.2 percent, followed by Phuket, Thailand, with a 10.1-percent increase to 69.7 percent. Shanghai, in China, had the only double-digit occupancy decrease, falling 11.6 percent to 56.6 percent.

Meanwhile, Hong Kong experienced the largest ADR increase, rising 22.8 percent to US$245.30, followed by Brisbane, Australia, with a 20.8-percent increase to US$190.91. And New Delhi (-7.6 percent to US$174.21) and Mumbai, India (-4.9 percent to US$177.32), ended the year with the largest ADR decreases.

Finally, five markets in the Asia/Pacific region saw RevPAR increases of more than 20 percent: Hong Kong (+25.8 percent to US$205.71); Jakarta (+23.5 percent to US$64.56); Bangkok (+23.0 percent to US$61.28); Brisbane (+21.2 percent to US$153.40); and Beijing (+20.1 percent to US$68.87).

Venice is Europe's star
The European region also reported positive results, according to STR Global. Across the continent occupancy rose by 3.1% and RevPAR rose by 12.7% in dollars. The star performer in 2011 across the whole of Europe was Venice, Italy, which had the only double-digit occupancy increase, rising 13.8 percent to 68.1 percent.

Venice also saw the largest growth in ADR, rising 13.1 percent to EUR275.13, followed by Paris, France (+12.5 percent to EUR237.04), and Zurich, Switzerland (+11.7 percent to EUR196.78).

Venice had the largest jump, too, in RevPAR, which rose 28.6 percent to EUR187.35. After Venice, the largest increases were for its great Italian rival renaissance city, Florence, (+15.0 percent to EUR91.95), and Paris (+14.3 percent to EUR187.20).

Meanwhile, Malmo, in Sweden, posted the largest decrease in occupancy in Europe, falling 7.0 percent to 59.0 percent. The next biggest drop was in Istanbul, Turkey, with a 4.0-percent decrease to 70.1 percent.

Following 2011's positive showing, STR Global predicts positive RevPAR growth in 21 of 34 major European cities in 2012.

Santiago has biggest increase in Americas
The Americas region recorded similarly positive results in 2011, with a 4.2-percent increase in occupancy to 60.2 percent, a 3.8-percent gain in average daily rate to US$104.26, and an 8.2-percent increase in revenue per available room to US$62.79.

Santiago, Chile, had the largest occupancy increase, rising 9.4 percent in occupancy to 71.5 percent, followed by Mexico City, Mexico (+7.9 percent to 62.5 percent), and Miami, Florida (+7.4 percent to 75.6 percent). Vancouver, Canada, had the largest occupancy decrease, falling 1.9 percent to 66.6 percent.

Three markets achieved double-digit ADR increases for the year, with two of them in Brazil. They were Sao Paulo, Brazil (+24.2 percent to US$141.54); San Francisco, California (+13.9 percent to US$155.14); and Rio de Janeiro, Brazil (+13.0 percent to US$205.23). Vancouver ended the year virtually flat in ADR with a 0.9-percent decrease to US$143.84, reporting the only decrease in that metric.

Sao Paulo (+27.8 percent to US$96.16) and Rio de Janeiro (+21.1 percent to US$155.35) experienced the largest RevPAR increases in 2011. Vancouver was the only market to report a RevPAR decrease, falling 2.7 percent to US$95.74.

China remains competitive
Meanwhile, In China the hotel market's performance remained positive, with revenue per available room (RevPAR) growing 2.8 percent compared with 2011.

China's secondary cities - not including Beijing, Shanghai and Hong Kong - are of great strategic importance to developers and were the focus of STR Global's analysis. Limited new supply and strong demand growth boosted RevPAR in the cities of Xiamen (+30.8 percent), in southeast China, and in Chengdu (+20.3 percent), located in southwest China, both important financial centres.

Hotel supply growth from city to city is supported by an expanding real estate market and a growing regional economy. The pipeline until 2014, indicates that supply growth will increase across all the secondary cities with Sanya (+50.1 percent) and Xiamen (+25.9 percent) leading the market growth. Suzhou (+11.3 percent), Xian (+12.0 percent) and Hangzhou (+9.0 percent), despite experiencing lower growth, will remain buoyant with new hotel openings, as international brands venture farther away from larger hubs.