Hotels in the Middle East reported negative total-year 2016 results, while hotels in Africa posted mixed results in the three key performance metrics for the same period.

Compared with 2015, the Middle East reported a 2.2 per cent decrease in occupancy to 66.2 per cent, a 7.2 per cent drop in average daily rate (ADR) to $174.60 and a 9.2 per cent decline in revenue per available room (RevPAR) to $115.59, according to data by STR, a hotel data benchmarking company.

Africa experienced a 3.6 per cent drop in occupancy to 55.4 per cent, but a 10.7 per cent rise in ADR to $108.14 pushed RevPAR up 6.7 per cent to $59.87.

Performance of featured countries and local markets for 2016

The UAE hospitality sector posted a slight increase in occupancy rates (+0.3 per cent to 75.0 per cent) in 2016, but saw declines in ADR (down 9.2 per cent to Dh631.51/$171.8) and RevPAR (down 9.0 per cent to Dh473.70/$128.9).

While supply (up 4.8 per cent) in the UAE grew at a rapid pace, demand (up 5.0 per cent) grew at a stronger rate for the first time since 2013.

At the market level, Abu Dhabi closed the year with declines in both occupancy (down 3.6 per cent to 71.7 per cent) and ADR (down 9.9 per cent to Dh467.49/$127.2). Dubai reported a slight increase in occupancy (up 0.5 per cent to 77.3 per cent) but a significant drop in ADR (down 9.9 per cent to Dh711.41/$193.6).   

Saudi Arabia's economy and hotel industry were heavily affected by the oil crisis as occupancy rates drop 4.8 per cent to 59.5 per cent, with ADR (down 3.9 per cent to SR764.08/$203.5) and RevPAR (down 8.5 per cent to SR454.84/$121) following suit.

As STR reported in August 2016, there is a correlation between the drop in oil prices and the downturn in hotel performance and profitability for GCC countries.

At the market level, Riyadh was heavily affected in 2016 with occupancy down 10.2 per cent and ADR down 8.1 per cent. According to STR analysts, oil is not the only factor affecting the country’s hotels, however, as sharp supply growth has pressured occupancy levels and overall performance. In December, Saudi Arabia’s Luxury segment experienced an 18.6 per cent increase in supply compared with the same month the previous year, contributing to a 23.3 per cent year-over-year RevPAR decline for the country’s Luxury hotels during the month.

Egypt’s occupancy (-14.5% to 45.8%) continued to fall amid ongoing security concerns, dropping 36.2% below pre-Arab Spring levels. The devaluation of the Egyptian pound resulted in a sharp increase in ADR (+31.2% to EGP793.97), pushing RevPAR up 12.3 per cent to EGP363.46

Egypt has recorded very little supply growth since 2012, while demand has been volatile (-13.9% for 2016). - TradeArabia News Service