Commenting on the survey, Yousef Wahbah, MENA Head of Transaction Real Estate at EY said:

“April was another positive month for the hospitality industry in the Middle East. As we transition into the summer months, less tourists are expected to visit the region and occupancy rates will gradually decrease. However, a number of key markets still demonstrated strong performance in their hospitality sectors in April, including the UAE and Saudi Arabia.

Hospitality markets in Jeddah, Riyadh and Makkah witnessed an increase in occupancy in April 2014. Jeddah’s average occupancy levels increased by 2.0% percentage points (pp) from April 2013, coupled with a jump in ADR of 11.2% during the same period, from US$235 to US$262. According to the Saudi Commission for Tourism & Antiquities (SCTA), Jeddah is experiencing an increase in the number of tourists due to the continuous growth of religious Hajj and Umrah tourism. This trend is in line with the country’s vision to become one of the most important and attractive destinations in the Middle East after the completion of new projects, such as the King Abdulaziz International Airport, the upgrading of accommodation facilities, and the major expansion of the Two Holy Mosques, in Makkah and Madinah.

The Riyadh Travel Fair 2014, which began on the 15th of April 2014, also had a positive impact on Riyadh’s hospitality market, witnessing a robust increase of 18.0% in the number of attending exhibitors compared to 2013 and prepared to accommodate between 15,000-20,000 visitors. This was reflected by the 10.0% pp jump in average occupancy compared to April last year. RevPAR increased by an impressive 8.1% during the same period, despite a slight decrease in ADR from $US229 in April 2013 to US$218 in April 2014.

Makkah’s hospitality market has also witnessed an increase in occupancy of 8.0% pp during April 2014, compared to the same period last year, but recorded a decrease in ADR of 17.5%, which resulted in a drop in RevPar of 7.8% during the same period. 

The UAE’s overall hospitality market also saw healthy growth in April 2014, with Dubai’s overall average occupancy levels remaining stable at approximately 85.0% in both April 2013 and 2014, even given the notable increase in room supply over last year. These positive occupancy levels were coupled by an increase in ADR from US$308 in April 2013 to US$327 in April 2014, resulting in an increase in RevPar of 5.6% during the same period.  April is one of the busiest months of the year for Dubai as the Emirate hosts a range of events that help boost visitor numbers, such as the Indian Premier League.

Additionally, while April 2014 ADR in Dubai was higher than March 2014 rates, average occupancy levels dropped from 90% in March 2014 to 84% in April 2014. The slight month over month decrease in occupancy from March to April is in line with the market’s typical seasonality, as tourism inflows begin to slow towards the hot summer months.

The hospitality markets in Bahrain and Qatar performed well in April, with both countries witnessing increases in their occupancy rates by 3% pp and 4% pp respectively.

In contrast, Beirut and Sharm El Sheikh’s hospitality market witnessed double digit declines in April 2014. Beirut has witnessed a decrease in RevPar of 24.4% in April 2014 compared to April 2013. The decline in RevPAR was due to the continued drop in average occupancy levels of 12.0% pp, coupled by a decrease in ADR from US$168 in April 2013 to US$156 in April 2014.

Additionally, although Cairo is relatively isolated from Sharm El Sheikh, the political situation in Cairo still had an impact on tourism on the Red Sea resort. There has been a decrease in Sharm El Sheikh average occupancy of 15.0% pp in April 2014 compared to April 2013, as well as a drop of 4.5% in the ADR during the same period, resulting in a decline in RevPar of 23.5%.

Hospitality market performance across the MENA region varied in April. There were slowdowns in some markets, but we continue to expect that, overall, the region’s hospitality sectors will perform strongly throughout the remainder of 2014.”