Middle East, Africa region records mixed hotel performance in Q1

Sharm El Sheikh Marriott Resort, Egypt. Photo credit: Marriott International

Hotels in the Middle East reported mixed first-quarter performance results in 2018. However, hotels in Africa posted growth across the three key performance metrics, according to the latest data from STR.

Occupancy across hotels in the Middle East rose 0.9 percent to 70.6 percent in the first quarter of 2018, compared to the same period last year. However, ADR and RevPAR failed to boost performance in the region, with ADR dropping 4.5 percent to $163.76 and RevPAR declining 3.7 percent to $115.62.  

African hotels’ performance fared better in the quarter, with increases in occupancy, ADR and RevPAR. Occupancy at Africa’s hotels rose 5.2 percent to 58.9 percent as ADR grew 6.6 percent to $125.18 and RevPAR increased 12.1 percent to $73.73. 

Mediterranean Resort & Hotel Real Estate Forum

Experience the Opportunities in Mediterranean Resort Investment | 17–19 October 2018

Join 300 of your industry peers at the 4th annual MR&H in Athens, Greece, to experience exclusive investment and development opportunities available in the Mediterranean.

Egypt

Egypt's hotel performance has continued to improve across a range of metrics, contributing to increased occupancy in the Middle East. The region recorded the highest occupancy levels for a first quarter in the country since 2010, growing 21.2 percent to 60.1 percent in Q1 2018.

Both the Sharm El Sheikh and Cairo/Giza markets, whose RevPAR levels grew 84.9 percent and 14.7 percent, respectively, supported the country's overall 35.5-percent year-over-year RevPAR increase to EGP775.69. Egypt’s substantial 11.8-percent increase in ADR to EGP1,291.72 bolstered the rise in RevPAR in the country. STR analysts expect this boost to continue as Russia recently resumed flights to Egypt following a two-year suspension. 

South Africa

Compared to Egypt, South Africa had a slow start to the year, partially due to a 2.2-percent growth in supply. STR's data indicated that supply growth in the country's luxury segment is leveling off. Despite the 2.6-percent rise in ADR to ZAR1,361.30, occupancy dropped 3.3 percent and 63.1 percent as RevPAR fell 0.7 percent to ZAR858.99.

At the market level, Cape Town reported an 8.9-percent decrease in occupancy in Q1 2018. That decline was steeper in March, when occupancy dropped 12.3 percent. STR analysts believe that the city’s water crisis has contributed to the negative performance. The announcement of “day zero” would have likely deterred international tourists, who would have had to book trips multiple months in advance. Johannesburg, on the other hand, saw a 2.5-percent increase in occupancy for the quarter. The city’s occupancy growth, along with a 5.1-percent increase in ADR, allowed the market’s RevPAR to grow 7.8 percent. 

United Arab Emirates

Healthy demand growth of 5.2 percent in the UAE was enough to outpace continued supply growth of 4 percent in the emirates. This led to a 1.1-percent rise in occupancy to 83.4 percent while mitigating the supply impact on rate levels. However, ADR and RevPAR could not meet the growth occupancy achieved in the region. ADR dropped 3.4 percent to AED666.48, while RevPAR fell 2.3 percent to AED556.12.

Key markets Abu Dhabi and Dubai recording overall performance declines, especially in RevPAR, dropping 4.0 percent and 2.6 percent, respectively. STR analysts note that the supply growth impact is more substantial in Dubai ahead of Expo 2020 while Abu Dhabi is looking to diversify its economy, reduce its oil dependence and focus on more development in the tourism sector.