# The Sky's The Limit



## Pearl of the Gulf (Sep 20, 2005)

_great article dealing mostly about dubai, but also covering a lot of areas in the middle east._ 


*The Sky's The Limit For Middle East Hotels | Deloitte Reports*

24 May 2006

*It used to be petrodollars that excited the economies of Middle East countries – but today it’s tourism.*

*The region is the fourth most visited place in the world, its air passenger traffic is growing faster than anywhere else, and Dubai – the powerhouse of the Gulf – is said to be the fastest growing city.*

*Around 80 hotels are expected to open within three years on the Arabian Peninsular, easily the fastest expansion on record*, and although parts of the Middle East now resemble building sites with cranes filling the skylines – the region’s popularity continues to grow.

*High hopes * 
We’ve become used to superlatives when we put the Middle East and tourism in the same sentence – whatever it is, it’s usually the largest, the highest, the most luxurious, and the fastest growing. It’s the same when it comes to hotel performance, with Dubai enjoying some of the world’s highest average room rates.

*This situation is unlikely to change in the short term – especially as the Gulf States of Dubai, Abu Dhabi, Qatar and Bahrain continue to pump millions of dollars into upgrading their airports and invest in global advertising.* 

Hotels in the Middle East have seen impressive growth over recent years - in the last two years the region has outperformed both Asia and Europe. However results from the HotelBenchmark™ Survey by Deloitte shows that the rate of growth has started to slow. During the first quarter of 2006, revPAR has increased by 11%, whilst this is still strong it is none the less someway off the heady 20 and 30% growth seen in 2005 and 2004. 

Despite a slight dip in occupancy levels, average room rates are still growing. During the first quarter of 2006, these increased by 15% to US$142, *resulting in a revPAR of US$96 – pushing performance of hotels in the Middle East ahead of the US by US$38 and Europe by US$21.*

*This excellent performance is driven by the fact that so many travellers are drawn to this part of the world* – attracted by the year-round sunshine, some of the world’s biggest shopping malls, high-quality accommodation and a relaxed attitude to western lifestyles. There is also the magnet of top class sport, as many Middle East countries are using major sporting events to propel themselves into the global tourism arena. 

Amazingly, for a country with 90% humidity in the summer months, Dubai also manages to appeal to skiers, keen to practise their skills in the chilled ski centres – whatever the climate outside. 

*The added value of sport * 
*Dubai was quick to recognise the added value of sports tourism. Having staged the world’s wealthiest equestrian event - the Dubai Cup * - for some years, its sporting calendar quickly filled up to take in golf, tennis, camel racing, rugby, international powerboat racing, and the Dubai Air Show. 

It is now building on this success with the Dubai Sports City, which will include a sports stadium, academies, a golf course, and plenty of high quality accommodation. 

*Bahrain has basked in the glory of Formula One, bringing in thousands of spectators to this small island, while enjoying the attention of millions of TV viewers*. This year, it’s Doha’s chance to shine, as the country hosts the Asian Games – second only to the Olympics in terms of global multi-sports events.

*During the first two weeks of December, 10,500 athletes and team officials from 45 countries across Asia will descend on Doha to compete in 40 sports events.* The Games has prompted a number of multi-million dollar projects aimed at bringing Doha’s infrastructure including new roads, hotels and leisure facilities, up to international standards. 

*Cleared for take off * 
Qatar Airways is running a linked promotional campaign by introducing a fleet of 2006 Games-branded aircraft, carrying the message ‘Let the Spirit Move You’.

The airline, the fastest growing in the world, will soon be adding New York and Melbourne to its destinations, bringing the total to 80. Earlier this year, it launched non-stop daily flights to Hong Kong – its 12th destination in the Far East. The country’s new international airport is due to open in 2009, handling around 12m passengers a year in its first phase. 

All the major airports in the region are being upgraded. Dubai International, for instance, is having a US$4 billion expansion, and a new six-runway airport is being built on the west side of the city. *Meanwhile, established regional carriers – such as Emirates Airlines and Gulf Air - have been expanding aggressively, placing multi-billion dollar orders to expand their fleets.* 

*Increased share of the market * 
These revamped and extended airport facilities will be needed if the World Tourism Organisation (UNWTO) predictions are right. During 2005, *the UNWTO estimated that the Middle East attracted 38m tourists, up 7% on the year before.*

This increase nudged the region’s share of the global travel market up to almost 5%, and the trend is expected to continue. *The UNTWO expects the region to see an average annual growth rate of 7% – the highest in the world – resulting in 68.5m international arrivals by 2020.*

Currently, around 6m tourists a year visit Dubai, and the government wants this to more than double to 15m by 2010. The country is particularly popular with Europeans – especially people from the UK – who make up a third of all visitors. However, the number of travellers from Saudi shot up by a third last year, and intra-regional travel is becoming increasingly important.

Arab visitors, for instance, are at the heart of the Nawart Masr - You Light Up Egypt – campaign, which is expected to attract more Middle East tourists to the land of the pharaohs. Meanwhile, Arab tourists will be encouraged to visit Sri Lanka and India, when Sri Lankan Airlines adds more direct flights to its Middle East destinations. 

Saudi, however, would prefer people to stay home. Religious tourism, due to the 4m pilgrims a year who visit Mecca, remains the country’s number one focus, but it wants to bring back into the country some of the US$8 billion Saudis spend when they travel abroad. Last year, Riyadh staged its first ever summer festival, replicating the success of Dubai’s annual shopping event, attracting thousands of local visitors. The country now wants to explore similar ideas. 

*Performance of key Middle Eastern markets – first quarter 2006/2005
RevPAR percentage change *​









*The top performer * 
With so much happening in Dubai, it’s not surprising that is continues to boast the highest occupancy and average room rates in the region. Although first quarter figures showed occupancy dipping slightly to 87% compared to the same period the year before, average room rates increased by 19%. *This meant that, at US$286, average room rates in Dubai are among the world’s highest, certainly leaving first-class destinations like New York, London and Paris trailing behind.* 

The pace of new openings in Dubai continued in 2005, however with most of these at the luxury end of the market there is still room for expansion in the mid-market and budget sectors. Keen to take advantage of these opportunities both Premier Travel Inn and easyHotel have recently announced plans to develop hotels in the market. 

Dubai’s success seems to be rubbing off on its neighbours, including Abu Dhabi. Here, there has been a rapid expansion in the number of new hotel openings, backed by the country’s own tourist board. During the first quarter of 2006, the market has seen the highest growth in average room rates in the region. These increased by 41% to US$157, fuelled by a number of exhibitions and conferences being hosted in the city. Although occupancy figures in the city did not appear so healthy – down 11% - the country’s expanding airline, Etihad Airways – now flying to 30 destinations - may help to boost this figure during the rest of the year. 

Next door, Doha managed to push its average room rates up 28%, to US$240 – taking it to second place behind Dubai. With the huge influx of visitors expected for the Games in December, and several brands opening hotels in the next couple of years, Doha’s time as a top tourist destination has finally come.

Turn the clock back a few decades, though, and the most popular place in the region was Lebanon – known as the Paris of the Middle East. Years of unrest and war ruined not only buildings and streets; they wiped out the country’s reputation as a holiday destination.

Recently, the country has been enjoying a renaissance, and although the assassination of its Prime Minister in February 2005 caused considerable damage, the picture is now getting brighter. There has already been a 20% increase in tourists this year and the country hopes to attract 2m a year by 2010.

More visitors need more places to stay, and several building projects are underway. Iconic designer Philippe Starke has chosen Beirut as the site for his first hotel in the Middle East, while Campell Gray Hotels plan to open a boutique hotel in 2007. The same year will see a new Four Seasons open, along with Grand Hyatt and Solidere Rotana Suites.

*Growth expected to continue * 
Although the continued threat of terrorism still looms on the horizon – as witnessed in Sharm El-Sheik in July 2005 - when the resort was victim to one of the country’s worst terrorist attacks – generally hotel performance in across the region has remained resilient. However, how the tourism industry and governments respond to such attacks remains key to ensuring traveller confidence. 

*Over the last two years the Middle East hotel market has outperformed both its Asian and European counterparts.* Although the rate of growth in the region appears now to be slowing, 2006 should none the less be a good year - even if new supply means that revPAR growth will be driven by average room rates rather than occupancy. Certain markets will of course stand out, particularly Doha, as it gets ready to host the Asian Games in December. 

It is clear that, although tourism in the emerging markets of China and India is demanding attention, the Middle East continues to be a dynamic market, and well worth watching. 

link


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## zee (Nov 30, 2005)

that is a massive article


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## Pearl of the Gulf (Sep 20, 2005)

^^ well worth the read. next time someone says why is dubai building these projects? like al bawadi; and whos going to staying in those apartments? we can tell them everyone in the world but you. 

the article only mentions hotels, but i believe a lot of people including some i know prefer staying in serviced apartments or short-term rent apartments instead of hotels.


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## Tom_Green (Sep 4, 2004)

I think it`s a little bit dangerous what`s happening.

They increasing the prices for rooms but the occupancy rates already started to go down.

The prices should fall again, or many people will look for other places to visit. 
Dubai is not New York or Paris right now.


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## dubaiflo (Jan 3, 2005)

they are increasing the prices because they can, they can afford to do it.
People still flock their hotels, occupancy rights are incredibly high...
once it decreases, they can still lower prices without loosing money.


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## Tom_Green (Sep 4, 2004)

_However results from the HotelBenchmark™ Survey by Deloitte shows that the rate of growth has started to slow. During the first quarter of 2006, revPAR has increased by 11%, whilst this is still strong it is none the less someway off the heady 20 and 30% growth seen in 2005 and 2004.

Although first quarter figures showed occupancy dipping slightly to 87% compared to the same period the year before, average room rates increased by 19%.

Dubai’s success seems to be rubbing off on its neighbours, including Abu Dhabi. Here, there has been a rapid expansion in the number of new hotel openings, backed by the country’s own tourist board. Although occupancy figures in the city did not appear so healthy – down 11%.

Around 80 hotels are expected to open within three years on the Arabian Peninsular_

dubaiflo: They could do this in the last years with a growth of 20 - 30%. But now the growth dropped by half to 11%.
Greedy people are more dangerous for Dubai than terrorists. This is my opinion. 

rapid expansion in the number of new hotel openings, growing room rates and a dropping occupany rate. I think the prices for hotel rooms will crash in the next 24 month.


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## dubaiflo (Jan 3, 2005)

^^ it will be similar to residential project.

not many hotels -> high occupancy rates -> high prices 
more hotels -> lower occupancy rates -> lower prices -> more people -> higher occupancy rates ....

it just remains to be seen how long it works, how many tourists eventually want to come to Dubai in 2010.


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## Gorilla (Jun 9, 2005)

majority of the expected tourist influx will be (in my opinion) from the local regions: Eastern Europeans, Gulf countries, Iran, India, Pakistan and eventually China....

There is a lot of money in the region due to high price of oil and very little fun around, provided the Dubai infra-structure can keep growing and entertainment is added then no problem


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