The international investor's appetite for the hotel sector in Middle East and Africa (MEA) remains strong with Dubai dominating the market thanks to its ease of access, quality hospitality offering, modern infrastructure, leisure and entertainment options and safe environment, said a report.

The MEA region's hospitality sector continues to witness solid development activity and destination building and the hotel assets continue to be favoured by sophisticated global investors, stated property expert JLL in its Mena Hotel Intelligence Report.

The report, which covers the key markets of Dubai, Abu Dhabi, Doha, Jeddah and Riyadh, was released at the Arabian Hotel Investment Conference (AHIC) in Dubai.  

The UAE is expected to retain its status as the region’s main tourist hub with active and differentiated strategies being implemented in other countries in the region such as Saudi Arabia, Oman and Qatar.

Chiheb Ben-Mahmoud, the executive vice president and head of hotels and hospitality group (Middle East & Africa) at JLL, said: "While Dubai hotels' ADRs ( average daily rates) and occupancy rates have been declining, their levels remain strong and healthy and can be expected to improve the competitive position of the city compared to other competing and established destinations in Europe and Asia."

'More generally, the MEA region continues to witness strong hotel development interest with differentiated and diverse strategies, supported by strong infrastructure programmes as well as niche and specialized hospitality offerings  such as heritage, boutique and retreat hotels," noted Ben-Mahmoud.

According to him, the investors are confident in the potential of the UAE, especially Dubai and Abu Dhabi as they have implemented ambitious growth strategies.

Dubai leads the tourism and hospitality market and has plans to attract 20 million tourists annually by 2020 leading up to the World Expo. Dubai hospitality has shown competitiveness adjustments, resulting in lower ADRs and occupancy rates which remain at healthy and strong levels.

The trend of Dubai being seen as a global business and leisure destination should continue in coming years, backed by the government’s pro-tourism initiatives, stated Ben-Mahmoud.

On the UAE capital, the JLL expert said Abu Dhabi hospitality was witnessing positive recovery amid a stabilization of the supply and the growing impact of the leisure and entertainment sectors.

On Qatar,  Ben-Mahmoud said due to the nature of Doha’s room supply which is heavily skewed towards luxury properties, the city is able to yield high average room rates for the region; however they have been under pressure and decreasing since 2008.

This pressure, he noted, will be compounded further by the 15,400 new rooms in the pipeline which represent a doubling of total stock in the coming years.

"Development of leisure tourism will remain critical to the long term tourism growth in Doha particularly beyond the 2022 FIFA World Cup event," he added.

On the Saudi scenario, Ben-Mahmoud said the demand may be affected in the coming months due to the decrease in oil prices since  the kingdom’s economy is largely based on oil exports.

"Moreover, the numerous new entrants to the market will affect performance and we expect average rates to decline further during 2015. The development pipeline is promising with many international brands planning to open in the second largest city in the Saudi Arabia, which will increase the current number of rooms by 75 per cent," he noted.

"Although Riyadh is already home to major international brands, there is a strong pipeline of hotels under development which will impact performance levels across hotels," he added.-TradeArabia News Service