Oman has emerged as the most improved destination
throughout the Middle East and North Africa (MENA) region in 2008,
recording a remarkable 34% Revenue per Available Room (RevPAR) increase.
According to end of year results released by MKG
Hospitality’s market monitoring database, Hotel Compset, Oman’s
excellent performance was fuelled by a major growth of almost 40%
in Average Daily Rate (ADR). Jordan was not so far behind, with a
26% growth in RevPAR, driven by a 17% increase in ADR and an 8.4%
rise in Occupancy Rate (OR). Egypt, Qatar, Bahrain, Algeria and
Tunisia also all recorded good results.
Overall however, Qatar recorded the highest
RevPAR at $223, followed by the UAE at $211 and then Oman and
Bahrain, almost equal at $164.
“However much the tourism sector has held up in
2008, and indeed it has resisted the downturn far better than
other industries, the economic downturn will start to take its
toll in the coming months, as consumers and companies alike
continue to cut back on travelling expenses,” said Director of
Development, MKG Hospitality, Vanguelis Panayotis.
Forecasts suggest that the situation will
deteriorate over the next 6-9 months. Most countries in the region
have already started to see a decrease in OR, signalling that
demand has dropped. Hoteliers are now expected to further reduce
their prices in order to encourage more guests.
“The indicator that must be observed very
carefully now is ADR. As demand is decreasing, competition will
increase and then the market will start to drop its prices in
order to maintain occupancy rates. When ADR decreases for several
months versus year-to-date, it is a clear sign of recession,”
“Unfortunately this sign might be stronger in
some markets such as MENA, where the majority of the rooms are in
the upscale and midscale segments, compared to mature markets in
Western Europe and the US, where there is more of an equilibrium
between hotel categories. The higher the category, the more
volatile price is, so we can expect the MENA region to show
stronger decreases than markets with more budget rooms. With this
in mind, 2009 and 2010 should see the development of more
budget-orientated products in the region, such as Express by
Holiday Inn, Ibis and the new concept from Rotana, Centro.”
Overall, the difficultly for hoteliers now will
be surviving the downturn, especially not knowing exactly how long
it will last, as President & CEO, World Travel & Tourism Council,
Jean-Claude Baumgarten explains: “These are very challenging times
for Travel & Tourism (T&T), as well as for other economic sectors.
It is now no longer a question of whether there will be a
recession, but rather how long it will last. And there is no magic
solution … no quick fix.”
“It is important to remember however that T&T is
a very resilient industry – people will not stop travelling for
long if they can help it. Travel has become a greater priority
than consumables generally. And, unlike the situation after 9/11
or SARS, the desire to travel has not disappeared this time –
except in isolated cases (e.g. on a temporary basis for India
after the Mumbai terrorist attacks). It’s just a question of
whether one can afford to travel as usual,” Baumgarten said.
As hotel demand decreases in 2009 and travellers
continue to spend less, industry-professionals will be taking
drastic action to uphold their level of competitiveness. Using the
downturn period as an opportunity to plan for the future will also
no doubt be critical.
“During this difficult period, hotels should
focus on two strategies: Cost and Revenue,” explained Revenue
Manager, Millennium Hotel Abu Dhabi, Ahmed Rasmy.
brain storming session to reduce costs and develop revenue streams
to capture new opportunities. Applying a total revenue management
concept will also reduce the impact. The key for success is the
coordination between all hotel departments and having a unified
MKG Hospitality, along with other leading
experts will be participating at the HOTEC Middle East 2009 Panel
Discussion in April. The event is set to be a lively debate on
sustaining the Middle Eastern Hotel Industry through this Global
Economic Crisis. Delegates will benefit from the interactive
format, as they will be able to raise questions and contribute
their knowledge to ensure that the panel discussion not only
addresses this important issue, but reaches important conclusions,
guidelines and predictions.
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