MENA HOTELS QUARTERLY REVIEW - Colliers
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MENA HOTELS QUARTERLY REVIEW Q1 | 2020
2
CONTENTS
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
3 Colliers Quarterly Update
4 Kingdom of Saudi Arabia
Riyadh
Jeddah
Dammam/Khobar
Makkah
Madinah
5 United Arab Emirates
Dubai
Abu Dhabi
Sharjah
Ras Al Khaimah
Fujairah
6 Egypt
Cairo
Alexandria
Sharm El Sheikh
Hurghada
7 Kuwait City, Kuwait
7 Manama, Bahrain
7 Muscat, Oman
7 Amman, Jordan
3
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
COLLIERS QUARTERLY UPDATE
COVID-19 PANDEMIC GCC UPDATE
Amid the Coronavirus outbreak, the GCC countries
have suspended all international flights and tourist
visas. Some of the hotels in the GCC countries have
been closed temporarily, while some are acting as
isolation centers during this period. Religious tourism in
Saudi Arabia has also been temporarily suspended.
Most of the countries are currently undergoing either
partial or complete lockdown in order to contain the
spread of virus.
HOTEL INVESTORS EXPECT RECOVERY
PERIOD TO BEGIN IN Q4 2020
Colliers International surveyed hotel investors in the
MENA region to get their perspective on the COVID-19
pandemic. It was found that 79% of hotel owners
decided to partially or fully close their hotels due to low
occupancy rates.
Most hotel investors remain hopeful for a relatively
quick recovery period. 46% of respondents expect the
recovery period to begin in Q4 of 2020.
ABU DHABI ANNOUNCES RELIEF
INITIATIVES FOR TOURISM INDUSTRY
Abu Dhabi has suspended all tourism and municipality
fees for the year 2020. Along with this, the restaurants,
tourism and entertainment sectors will also get a 20%
rental reduction for the full year 2020.
The travel and tourism sector has been hit hardest by
coronavirus, initiatives like these have been designed to
support the industry during these difficult times.
RISE IN TOURISM INTEREST IN KSA
Interest in the Kingdom of Saudi Arabia as a tourist
destination picked up since the launch of the new
tourism visa in September of last year.
The Saudi Commission for Tourism and National
Heritage (SCTH), revealed that visitors from China, UK,
Malaysia, United States and Canada topped the list of
new arrivals to the Kingdom after the launch of the new
tourist visa.
Al Ula tops the list of destinations amongst Chinese
travelers.
4
KINGDOM OF SAUDI ARABIA
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
The COVID-19 pandemic has had a significant impact on the hotel industry in the
Kingdom of Saudi Arabia. The Saudi hotel market experienced a drop in occupancy
with Makkah being the hardest hit market due to a temporary halt on religious
activities, which draw millions of people to the city every year.
Key Performance Indicators (Year-on-Year Change) Highlights
Saudi Arabia introduced a temporary
ban on pilgrimages to the country
due to concerns over the spread of
COVID-19 in the region.
Makkah was the hardest hit market,
reporting a drop of 23% in occupancy
compared to the same period in
2019. Riyadh was the only market
that experienced an improvement in
occupancy levels for the first quarter.
Hotel Supply (No. of Branded Hotel Keys)
Despite the low occupancy in the first
83,000 quarter, Riyadh, Makkah and
72,000 Madinah reported an increase in
62,000 ADR compared to Q1 2019, due to
50,000 53,000
the strong performance within the
first two months.
2019 2020 FY 2020 FY 2021 FY 2022
Outlook
The branded hospitality market in
Source: Colliers International KSA is expected to reach 62,000
Note: Includes only branded hotel supply; considers potential cancellations and delays
keys by the end of 2020, with
Year–on-Year % Change in Supply Makkah and Riyadh being the largest
contributors to the supply.
The supply is expected to grow at a
CAGR of 16% from 2020 to 2022.
However, it is important to note that
the COVID-19 pandemic is expected
to have an influence on construction
timelines during this period.
5
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
UNITED ARAB EMIRATES
A total of 7,900 quality branded hospitality keys have entered the market between
Q1 2019 and Q1 2020. 95% of this new supply opened in Dubai. These branded
hotel openings include Crowne Plaza Dubai Marina, Radisson Red Silicon Oasis
and ME Dubai Hotel.
Key Performance Indicators (Year-on-Year Change) Highlights
The UAE’s hospitality industry is one
of the hardest hit by the outbreak of
COVID-19. With the UAE suspending
all flights including transit at the end
of Q1 2020, international hospitality
demand has seen a sharp decline.
In Q1 2020, overall performance has
declined across the UAE with many
of the emirates indicating double digit
decreases in both ADR and
Hotel Supply (No. of Branded Hotel Keys) occupancy levels.
137,000 The market has seen an 8% increase
124,500 in supply over the past year.
109,900
101,900
94,000
Outlook
Q1 2019 Q1 2020 FY 2020 FY2021 FY2022
The supply in the market is expected
Source: Colliers International to increase at a CAGR of 12%
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
between 2020 and 2022. This will
Year–on-Year % Change in Supply introduce an additional 35,200 keys
in the market.
The COVID-19 pandemic is expected
to have an influence on hotel
openings during this period.
Government restrictions might have
an impact on construction of
hospitality projects, ultimately
slowing down the completion of new
projects in the country.
6
EGYPT
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
COVID-19 has had a drastic impact on the hospitality industry globally and in Egypt.
Despite this, the hospitality industry continues to support medical efforts by
providing facilities for quarantine.
Key Performance Indicators (Year-on-Year Change) Highlights
The markets with a higher
dependence on the leisure segment
have experienced a more significant
shift in occupancy in Q1 2020, with
an average drop of 24% across the
Alexandria, Sharm El Sheikh and
Hurghada Markets.
Alexandria’s growing popularity as a
Mediterranean destination is
evidenced by the markets ability to
Hotel Supply (No. of Branded Hotel Keys) achieve ever higher rates. Despite
reduced demand in Q1 2020, the
87,000 88,300 Alexandria hotel industry
81,900 81,900 84,600
experienced improvement in rates.
2019 2020 FY 2020 FY 2021 FY 2022
Outlook
An additional 6,000 keys are
Source: Colliers International expected to open in the Egyptian
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
market by the full year 2022.The
Year–on-Year % Change in Supply forthcoming supply might experience
delays due to the impact of Covid-19
on projects under construction.
The Red Sea markets of Hurghada
and Sharm El Sheikh account for
62% of the forthcoming branded
supply in the Egyptian markets.7
KUWAIT CITY, MANAMA, MUSCAT,
QUARTER 1 2020 | MENA
MENA Quarterly Review | Colliers International
AMMAN
A total of 1,200 keys have opened year-on-year in the respective markets. Some
key hotel openings in 2020 include JW Marriott Muscat, Royal Tulip Muscat and
Swiss-Belinn Muscat.
Key Performance Indicators (Year-on-Year Change) Highlights
Each of the markets recorded a
stable January performance with
mostly single digit year-on-year
RevPAR change.
Beginning in the month of February;
however, the ensuing COVID-19
global pandemic began to
significantly impact the markets’
performance. This resulted in year-
on-year RevPAR declines of between
Hotel Supply (No. of Branded Hotel Keys) 17% to 33% amongst the markets.
33,500 Over the last year, supply has
30,500
27,100 increased by 5%. Notably, Manama
24,000 25,200
and Amman have been the markets
that have not witnessed any new
hotel opening.
Q1 2019 Q1 2020 FY 2020 FY 2021 FY 2022
Outlook
The containment of the spread of the
Source: Colliers International COVID-19 has now become the
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
focus in each of these markets. This
Year–on-Year % Change in Supply is expected to have an impact on
construction timelines resulting in
potential delays for hotel openings.
Beyond 2020, Colliers projects that
total branded hotel supply in the
respective markets will increase by
33%, thus reaching 33,500 keys by
end of 2022.
Source: Colliers InternationalFOR MORE INFORMATION Christopher Lund Saqib Jafri Head of Hotels | MENA Region Associate Manager | Hotels MENA Region +971 55 899 6110 +971 55 769 9797 Christopher.lund@colliers.com saqib.jafri@colliers.com James Wrenn Senior Manager | Hotels MENA Region +971 55 736 6767 James.wrenn@colliers.com
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