Middle East Hotels Enjoy Third Year of Double Digit Growth

Hoteliers across the Middle East posted their third year of double-digit revenue per available room (revPAR) growth in 2006 according to year-end data from the HotelBenchmark Survey by Deloitte.

The region saw revPAR increase 16.7% last year fuelled by a 17.8% improvement in average room rates – up to US$143 from US$120 in 2005. However continuing terrorist threats combined with an increase in hotel supply resulted in marginal declines in occupancy.

Reported to be the fastest growing place on earth, it’s not surprising that Dubai continues to achieve the highest occupancy and average room rates. Whilst occupancy fell slightly compared to 2005, rates soared 15.0%. At US$249, average room rates in this region are among the highest in the world, bypassing other destinations such as London and Paris.

With plans to replicate Dubai’s success in full swing, Abu Dhabi recorded the strongest growth in average room rates of any market in the Middle East - up 48% to US$177 last year. Hoteliers are reaping the rewards of the country having its own airline - Etihad Airways - and tourist board. Despite average room rates doubling since 2004 – they are still lag Dubai by US$72.

In Qatar, Doha saw revPAR increase 41.8% in December 2006 as the city hosted the Asian Games. While occupancy only increased 3.4%, average room rates leapt 37.1% to US$381 which helped Doha finish the year with revPAR growth of 20.3%. 

Lorna Clarke, Executive Director of HotelBenchmark commented on the impressive results, “Hotels across the Middle East continue to exceed expectations. Although the growth seen in 2006 wasn’t as strong as that achieved in 2005 - it is still impressive given the backdrop of political unrest and the continuing threat of terrorism. Massive investment in hotels, resorts, air travel and sports facilities have put other regions in the shade. And, with aggressive plans to continue to drive up tourist numbers across the region, we expect hotel performance to continue to do well.”

Rob O’Hanlon, Partner, Deloitte Middle East added, “Hotel chains are responding to this expected influx of tourists, by gearing up to provide a range of accommodation. Traditionally, the Middle East has focused on the luxury end of the market however the budget sector is becoming increasingly attractive luring in the likes of Premier Travel Inn, easyHotel and Yotel. With this development, there is a growing recognition of the need to manage the impact on the environment of large scale tourism.”