(MENAFN- Khaleej Times) In the second edition of PwC's hotel forecast Dubai Abu Dhabi Doha Jeddah Muscat and Riyadh saw an increase in revenue per available room in 2014.
Growth fundamentals for the Middle East hotel industry remain strong with solid performance in terms of average daily rate or ADR and occupancy levels but external factors present new challenges according to PwC’s second Middle East hotel forecast report.
The unexpected drop in oil prices and the weakening of the euro are impacting tourist numbers especially tourists from Russia. “It may take time for this to reverse so oversupply could become an issue especially at the crowded luxury end of the market” said Philip Shepherd partner at PwC Middle East Hospitality and Leisure Leader.
He said high occupancy has been a long-term trend in the region but with so much new supply coming on-stream PwC warns there lies to be a question mark about whether this is sustainable in the future. With over 54000 rooms under construction and another 72000 planned for the region supply could well start to outstrip demand putting ever greater pressure on both occupancy and ADR.
In the secondedition of PwC’s hotel forecast Dubai Abu Dhabi Doha Jeddah Muscat and Riyadh saw an increase in revenue per available room or RevPAR in 2014 with a double-digit rise in Doha and nearly that in Jeddah. Abu Dhabi and Muscat saw around a six per cent increase and Dubai managed only marginal RevPAR growth as occupancies fell.
“Some 50 million people visited the region during 2014 and the Middle East easily outstripped most other regions in terms of ADR and occupancy levels” said Alison Grinnell director of PwC’s Middle East Hospitality and Leisure Assurance Leader.
The PwC forecast for 2015 and 2016 paints a different picture; after a mixed year in 2015 PwC believes growth will again be the dominant theme for 2016. The cities best placed for growth in 2015 are Jeddah and Abu Dhabi with forecast RevPAR growth of 7.3 per cent and 6.7 per cent respectively and growth also expected in Doha (6.5 per cent ).However Muscat Dubai and Riyadh are likely to see a decline in RevPAR.
In 2016 PwC believes that there will be positive growth in all six cities. Muscat and Abu Dhabi are forecast to achieve good growth in both ADR and occupancy driven by infrastructure spend moderate supply increases and the increase in tourist numbers that will result from government promotional programmes.
Doha is expected to see a return to positive ADR growth in both 2015 and 2016; however the city’s ability to manage the supply coming on board will be the driving factor to achieving this forecast.
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