Falling oil prices hurt Middle East hotels

Rezidor expands across the Middle East with 11 openings in Saudi Arabia and 5 openings in UAE this year.
Image: PixBy iA / CC by 2.0

November was a mixed bag for hotels in Europe, the Middle East and Africa, according to the latest data from STR. While Europe’s and Africa's hotel sectors reported positive results, hotels in the Middle East are seeing declines that can be attributed to the falling price of oil.


From November 2016 to November 2017, occupancy in Europe's hotels increased 1.9 percent to 71.2 percent, while ADR grew 3.8 percent to €105.45. RevPAR, meanwhile, 
was up 5.8 percent to €75.11 year-over-year.

The absolute occupancy level is the highest for any November in STR’s database. This as especially notable, analysts at STR said, given several acts of terrorism earlier in the year and the added challenge of political instability in several of the region’s major markets. 


Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

When examining specific days of the week, Tuesdays (80.3 percent) and Wednesdays (77.8 percent) showed the highest occupancy rates, suggesting that corporate demand remains a strong factor in overall performance results in Europe. This was confirmed in ADR levels for the same days—Tuesdays (€108.83) and Wednesdays (€108.37) once again produced the highest absolute levels.

At the country level, Turkey reported the largest year-over-year increases in occupancy (+13.4 percent to 62.7 percent), ADR (+16.7 percent to TRY266.26) and RevPAR (+32.3 percent to TRY166.98).

The second-highest jump in RevPAR was seen in Portugal (+23.1 percent to €57.11). 

Performance in the United Kingdom was relatively flat overall: occupancy (-1.3 percent to 77.6 percent), ADR (+1.9 percent to £93.52) and RevPAR (+0.6 percent to £72.59). 

Middle East & Africa

In Middle Eastern hotels, occupancy declined 1.8 percent to 69.6 percent from November 2016 to November 2017. ADR dropped 4.6 percent to US$171.10, while RevPAR was down 6.3 percent to US$119.01. 

STR analysts note that consistent declines in RevPAR over the past two years correlates with the drop in oil prices. Qatar, Bahrain and Saudi Arabia have experienced the steepest performance decreases in 2017, and all have been significantly affected by reduced corporate business. 

For the same period, African hotels reported occupancy growth of +8.7 percent to 64.3 percent, while ADR increased 0.9 percent to US$106.73 and RevPAR was up 9.7 percent to US$68.66.

Northern Africa drove demand and occupancy growth for the region, with increases of 26.0 percent and 25.2 percent, respectively. Egypt helped that performance with continued high occupancy growth (+39.3 percent). ADR decreased in Northern Africa (-4.0 percent), which was in part due to decreases in Morocco (-8.5 percent) and Tunisia (-2.0 percent). 

ADR in the Southern Africa region grew 4.7 percent, pushing RevPAR up 4.9 percent. While occupancy only grew 0.1 percent, the 68.6 percent absolute occupancy is the region’s highest occupancy for a November since 2008.