As Dubai prepares to welcome the Future Hospitality Summit later this month, global independent real estate consultants, Knight Frank have shared some key insight including the development of 65,000 hotel rooms in Dubai. They forecast tourism contribution in the emirate is set to reach 15% of GDP by 2030. This is the highest in the region and among the highest in the world, with an international average of 9%.
According to the data from Knight Frank, more than 100 million tourist arrivals and over USD 270 billion in revenue contribution is expected this year. We take a look at how the Middle East region has been recovering since the beginning of the year and whether hotel website performance indicators are pointing in the same direction.
The cities surpassing pre-pandemic performance levels
The success of Expo 2020 in Dubai which was postponed due to Covid-19 until late 2021 and early 2022, was a welcome boost and has helped drive the emirate’s recovery. Pre-pandemic, the average website revenue for Dubai hotels (2019) was AED 511,658, in 2020 this dropped to AED 391,605 and in 2021 reached AED 662,419. Looking at year to date data, average hotel website revenue is already at AED 1,006,687, a massive 96% increase on 2019, driven by higher average order values and higher room rates.
With just two months remaining until the FIFA World Cup action begins in Qatar, expectations are also high for the hospitality landscape and Doha in particular where the Lusail Stadium will host the final game on 18th December. Qatar hotels enjoyed average website revenues of QR 257,612 in 2019 compared to 2022 YTD average website revenues of QR 197,880, just 30% behind with Q4 expected to deliver even better performances as visitors flood to the country for the football.
In Abu Dhabi, hotel rates and average order value have again been the driver with hotel performances outpacing 2019. Comparing August 2019 – August 2022 the chart below shows average monthly website revenue 122% higher in August 2022 than in the same month in 2019.
In Egypt, Cairo hotels are enjoying some of the highest average website revenues in the Middle East region. The table below illustrates month by month performance of several key markets in the region since the start of the year.
Cairo has enjoyed higher website revenues consistently over the last eight months. The Egyptian government’s concerted efforts to boost tourism in the form of visa reforms and marketing campaigns will likely see more tourists head to Cairo with the opening of the Grand Egyptian Museum later this year and to Egypt's resort hotspot Sharm El Sheikh which has also enjoyed a strong rebound in 2022.
Riyadh has also seen a dramatic increase in hotel website revenues since May, which tailed off in the last couple of months. It is hoped, Vision 2030 ambitious regenerative projects like the Red Sea will firmly position Saudi Arabia on the global tourism map, so these positive signs of recovery will no doubt be good news to hotel investors. According to data from Knight Frank, the the Kingdom of Saudi Arabia has a total of 310,000 hotel keys under development with the goal of 100 million tourists by 2030.
Business travel is returning to the region
While business travellers have returned to the region, it still represents a much smaller percentage than pre-pandemic. Remote working and the cost savings of hosting meetings on-line has done little to encourage travelling for face-to-face meetings. According to a recent report by the Travel & Tourism Council (WTTC), business travel expenditure is forecast to rise by 32% in 2022. The WTTC report, compiled in collaboration with McKinsey & Company, ranked the Middle East region first with an increase of 49 per cent, followed by Europe and Africa (36 per cent), Asia Pacific (32 per cent) and the Americas (14 per cent), but this report was compiled several months ago, ahead of the travel disruptions which added less appeal to travel internationally to or from countries facing disruption and also does not take into account the fear of a looming recession.
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