Despite a recent report regarding declining hotel profitabIlity in the MENA region, Marriott International expects to add 19 new properties and more than 3,000 rooms to its Middle East and Africa portfolio in 2019, in line with its expansion plans to add more than 100 new properties and nearly 26,000 rooms across the region by year-end 2023.
Marriott estimates its development pipeline represents up to $8 billion of investment from property owners and is expected to generate more than 20,000 new jobs across the region.
“Our growth across the Middle East and Africa is fueled by a strong demand for our diverse range of well-established brands, each offering different attributes that cater to this region’s ever changing and evolving marketplace,” said Jerome Briet, chief development officer, Middle East and Africa, Marriott International. “This region continues to present us with opportunities to further grow and enhance our portfolio across new and established markets. While the majority of our growth will be through new-builds, we are seeing an increasing number of conversion opportunities, especially in the luxury space.”
Year-to-date, the company has opened five new properties in the region and is expected to add 14 more, bringing its portfolio across the Middle East and Africa to nearly 270 properties and more than 60,000 rooms by the end of the year.
The company is poised to expand its luxury footprint in the region by more than 70 percent by the end of 2023, with more than 25 luxury properties under development. The company has seven anticipated openings across four brands slated for this year:
- The recent opening of W Dubai-The Palm and the anticipated openings of W Muscat and W Yas Island, W Hotels should double its portfolio in the region.
- The St. Regis brand will launch in Jordan and Egypt with the openings of The St. Regis Amman and The St. Regis Cairo.
- The North Island is expected to join The Luxury Collection.
- JW Marriott will debut in Oman with the opening of the JW Marriott Muscat Convention Center.
Marriott expects to open more than 30 hotels to its upscale portfolio by year-end 2023, with four opening by the end of 2019:
- The Autograph Collection will debut in Kenya with the addition of Sankara Nairobi.
- Marriott Hotels and Marriott Executive Apartments increased its presence in Saudi Arabia with the recent openings in the Diplomatic Quarter of Riyadh. Marriott Executive Apartments also is expected to open a property in Madinah later this year.
- Marriott Hotels is planning to open its second property in Algeria, in the capital city of Algiers.
As part of its Sheraton upgrade, the company is renovating both the Sheraton Jeddah Hotel and Sheraton Grand Hotel, Dubai.
Regional Demand for Select-Service Fuels Growth
Currently representing more than 40 percent of the company’s development pipeline through 2023, select-service brands continue their rapid growth trajectory across the Middle East and Africa, according to Marriott. Building on the momentum from 2018, with 10 properties added across the region, the company expects to add seven new properties by year's end:
- The Four Points by Sheraton brand will have four openings. It recently opened properties in Sharjah (UAE) and Setif (Algeria) and is on track to open two more properties this year, including the Four Points by Sheraton Dar es Salaam New Africa in Tanzania and Four Points by Sheraton Lahore in Pakistan.
- The Residence Inn by Marriott brand will make its debut in Algeria with the opening of Residence Inn by Marriott Algiers
- The Protea brand will expand in Uganda with the opening of Protea Hotel by Marriott Naguru Skyz.
- Element Hotels is set to launch its first property in Africa with the opening of Element Dar es Salaam in Tanzania.
The growth plans are interesting given HotStats' recent report about profitability in the Middle East and North Africa market. Total gross operating profit (GOPPAR) for February declined 4.3 percent year over year and as of the end of the month, profit levels in the region were already 9.6 percent behind the same period in 2018. According to HotStats, growth in rooms revenue was driven by a 2.6-percentage-point increase in occupancy to 73.9 percent, which was one of the highest room occupancies recorded in the region in the last 12 months. But at the same time, average room rate was down 3.1 percent year over year.