Saudi Arabia leads Middle East hotel growth

The latest report from STR Global found that the Middle East has 253 hotels with a total of 82,446 rooms under construction for a 57 percent year-on-year increase in November. The majority of these rooms are in Saudi Arabia, which has 72 properties with 34,415 rooms under construction. 

The United Arab Emirates took second place in the construction race with 27,458 rooms in 94 hotels, followed by Qatar (6,976 rooms in 29 hotels), Egypt (3,934 rooms in 13 hotels), Morocco (3,143 rooms in 17 hotels) and Jordan (3,055 rooms in nine hotels).

Looking ahead, 501 hotels with a total of 144,321 rooms are under contract for the region, an increase of 30 percent over the same month in 2014. 

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Hotel room supply grew 5.4 percent last month in Dubai alone. This outpaced demand, which was up 2.4 percent--a somewhat worrying factor that has driven room rates down 7 percent from November 2014. The growth in supply also caused occupancy to fall nearly 3 percent, which in turn drove RevPar down 9.8 per cent to Dh737.7.

Elsewhere in the UAE, Ras Al Khaimah’s man-made Al Marjan Island complex (an answer to Dubai's famous Palm and World developments) is trying to attract Chinese investors, after securing Emirati, Kuwait, Czech and some Chinese investment. Speaking at the China-Middle East Business Forum in Dubai last week, Al Marjan Sales and Marketing Director George Saad said there is “great potential” for Chinese construction, development and services companies, although he would not say how much investment the project was seeking or had raised so far. Gulf News estimated the cost of the development to be around $1 billion.

When development is complete, the islands are expected to have 8,000 hotel rooms, a necessary number to accommodate the emirate's goal of attracting 2.9 million visitors by 2025. 

Last month, UAE-based Man Investments signed a master development partnership with UK-based budget hotel operator easyHotel to start developing properties in the Middle East. The group will reportedly focus the new hotel developments in UAE and Oman, targeting an initial opening of 600 rooms by 2017. 

Beyond the UAE, Jordan is getting some attention from Wyndham Hotel Group, which will be managing a hotel in the ancient city of Petra under its Rama Hotels brand. The former Winter Valley Warwick Resort & Spa will be renamed the Ramada Dead Sea, according to the local government in Petra.

And after some rough times following the bombing of a Russian passenger plane that departed from Egypt's Red Sea resort community of Sharm el-Sheikh, the region may get a new development courtesy of an unnamed Saudi businessman.  

Hotelier Middle East is reporting that Egyptian tourism minister Hisham Zaazou has confirmed that the businessman is in talks with Egyptian authorities over a $4 billion tourism resort. The project, if approved and completed, would be the largest resort in the Red Sea destination. The minister, however, did not elaborate on the progress of the talks. 

The assistance is needed: Earlier this month, the Wall Street Journal took a look at the community's struggles. “Occupancy [rate] this time of the year normally records between 50 percent to 60 percent at most, but it currently lies between 13 percent to 15 percent,” Gilan el Gafy, chairman of the South Sinai branch of the Egyptian Hotel Association told Journal. European airlines British Airways and easyJet have suspended all flights to Sharm El Sheikh until January, and Zaazou predicted that losses would reach $843 million if the situation was not solved within three months. 

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