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  • 8/10/2019 Aranca MENA Tourism and Hospitality Report Q3 2014 | Aranca Special Report

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    MENA Tourism and

    Hospitality Report

    Theme: Green Tourism

    Q3 2014

    aranca.com

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    able Table of Contents

    01.

    MENA Tourism Synopsis .............................................................................................. 1

    02.

    Hospitality Market Update ........................................................................................ 2

    03. Kuwait Tourism Industry .............................................................................................. 6

    04.

    Theme: Green Tourism ............................................................................................... 8

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    MENA Tourism and Hospitality ReportQ3 20142

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    02Hospitality Market Update12The hotel industry in the Middle East & Africa (MEA) reported positive performance in

    Q3 2014. Despite ADR declining from $156.54 in July to $145.12 in September, steady

    growth in occupancy rates from 49.3% in July to 65.5% in September caused RevPAR

    to increase from $77.15 in July to $94.99 in September 2014

    OCCUPANCY RATE

    PERFORMANCE IN JULY

    In July 2014, visitor demand in Cairo (Egypt) increased, boosting occupancy rates by 12.5 pps1

    to 29.3% compared with the same period last year. Although occupancy levels were below

    those in 2013, growth in performance levels during previous months is a positive sign and

    indicates the market is scheduled to achieve performance levels exceeding those in 2013.

    Occupancy Doha (Qatar) improved by 5.5 pps2to 47.6%, driven by increased regional leisure

    tourist demand.

    Abu Dhabi (UAE)soverall occupancy levels stood strong at 50.3%2 in July 2014, boosted by

    robust regional visitor demand.

    Occupancy rates in Riyadh (KSA) fell slightly by 0.3 pps2 in July 2014. The month of Ramadan

    has historically resulted in substantially lower levels of demand and July was no exception, with

    the overall market achieving an average occupancy of 38.3%. In contrast, Makkah and

    Medina (KSA) witnessed an influx of travelers during Ramadan, with more than 20% 1

    occupancy growth in both markets.

    Dubai (UAE)soccupancy levels declined 4.6 pps2to 50.3% in July 2014. Hotels in Dubai were

    impacted by the collective effect of the annual deceleration in summer and the occurrence

    of Ramadan throughout the month.

    Occupancy rates in Amman (Jordan) decreased 8.7 pps1 to 34.4%, reporting the largest

    decline the occupancy metric in the region.

    PERFORMANCE IN AUGUST

    In August 2014, Cairo (Egypt) reported the largest increase in occupancy rates of 37.8 pps1to

    58.8%, driven a rise in hotel demand. Hotels in Cairo welcomed the largest number of guests in

    August than in any other period since the protests in the country intensified.

    1STR Global Data, Middle East/Africa Hotel Sector Performance for July, August, September 20142HotStats MENA Chain Hotels Review (Only Four and Five Star Hotels)

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    Riyadh (KSA) experienced the second largest growth in occupancy rates of 12.5 pps1to 48.3%

    in August 2014. The conclusion of Ramadan led to resumption of corporate activity, which

    improved demand in the city. Furthermore, several local and regional conferences and events

    resulted in an increase in corporate tourist inflows.

    Demand in Jeddahshotel market increased, with occupancy rates growing 6.8 pps2to 77.0%.

    Jeddahspopularity as a premier leisure destination in the Kingdom continues to drive strong

    levels of domestic leisure travelers to the city, especially during the Eid Al Fitr holiday and

    summer school holidays.

    Hotels in Kuwait experienced weakening market conditions, as occupancy declined by 1.5

    pps2to 35.6% in August 2014. Due to the absence of any distinct leisure or retail attractions in

    Kuwait, hotels struggled to capture a suitable share in the leisure segment from domestic and

    regional markets during the summer holidays. The lack of diversification of Kuwaits leisure

    attractions significantly impacts the market during the summer months as corporate activity

    slows and residents travel abroad to other destinations in the region and globally.

    Occupancy in Doha (Qatar) increased 13.3 pps2

    to 59.9%, largely due to the influx of leisuretravelers, who benefitted from the remaining summer and Eid holidays that extended into

    August for certain GCC nations. This trend is positive for the realization of the National Tourism

    Strategy 2030, which aims to diversify its demand base to include a greater proportion of

    regional travelers through the development of cultural assets and family-based leisure

    attractions.

    Abu Dhabi (UAE)shotel market continued to improve performance levels as occupancy rose

    7.5 pps2 to 71.3%. The culmination of Ramadan and Eid Holidays in the beginning of August

    enabled hotels in Abu Dhabi to attract a robust number of regional travelers to the citys

    entertainment and shopping attractions. Furthermore, the Tourism and Cultural Authority

    (TCA)s

    proactive approach to promote the destination in emerging markets, particularly

    China, resulted in a 189% increase in room nights purchased by Chinese visitors in the first six

    months of 2014 vis--vis the same period in 2013.

    PERFORMANCE IN SEPTEMBER

    Occupancy in Sharm El Sheikh (Egypt) increased the most, by 43.5 pps2to 77.7%, in September

    2014. Efforts undertaken by prominent travel associations and tour operators to attract visitors

    to the Red Sea destination boosted occupancy rates.

    In September 2014, Cairo (Egypt)s occupancy rates expanded 26.8 pps1 to 51.8%.

    Improvement in security and the social environment helped the market regain confidence.

    Occupancy rates in Abu Dhabi (UAE) increased 6.6 pps2 to 76.6%. The upward trajectory in

    occupancy rates is forecast to continue during the next couple of months as the city prepares

    for high season, with notable events such as the Formula 1 Abu Dhabi Grand Prix and the

    opening of the much-anticipated Yas Mall scheduled in November.

    Jeddah (KSA)soccupancy rates rose 2.3 pps2to 85.9%, predominantly driven by the lack of

    new hotels entering the city and increased proliferation of demand particularly in the

    corporate and conferencing segments. Demand is anticipated to remain strong as numerous

    infrastructure and mixed-use projects are under development in the city.

    Occupancy levels in Dubai (UAE) increased 2.1 pps2to 78.2% in September 2014 as the market

    returned to business after the summer.

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    AVERAGE DAILY RATE (ADR)

    PERFORMANCE IN JULY

    In July 2014, Jeddah (KSA) was the regionsonly market to report a double-digit increase in

    ADR (up 12.5%1

    to $286.28). Abu Dhabi (UAE) followed, with 5.1% growth to $114.10 due to ashift in hoteliersyield strategies in response to robust overall occupancy levels. Average rates

    in Abu Dhabis market have declined steadily since August 2011; however, this trend has

    started to reverse, with hotels ADRsgradually rising during the first five months of 2014, fuelled

    by strong regional visitor demand. This is expected to continue through 2014, especially as

    hoteliers prepare for peak season.

    ADRs in Dubai (UAE) increased 1.1%2to $202.94 in July 2014.

    Cairo (Egypt)shotel market experienced an increase of 1.0%2to $114.85, with the new political

    situation providing market stability.

    Hotels in Doha (Qatar) recorded a marginal increase of 0.7%2

    in ADR to $201.56 in July 2014.

    ADRs in Riyadh (KSA) decreased the most by 4.8%1to $207.05 in July 2014.

    PERFORMANCE IN AUGUST

    In August 2014, Cairo (Egypt)s ADR grew the most by 8.6%1 to $108.29. Political stability

    boosted demand, enabling hoteliers to adopt more progressive pricing strategies. The Ministry

    of Tourisms promotional campaign, launched in July to attract tourists to the country,

    benefitted hotels and is expected to improve tourism demand in the coming months.

    ADRs Jeddah (KSA) rose 8.4%2to $296.64 in August 2014, driven by increased demand.

    Doha (Qatar) registered a decline of 3.0%2 in ADR to $215.61 in August 2014. Furthermore,

    Kuwaits ADRs decrease 3.8%2 to $261.54. The lack of diversification in Kuwaits leisure

    attractions adversely impacted the market during the summer months.

    ADRs in Dubai (UAE) decreased 5.6%1to $181.83 in August 2014. Eid celebrations shifted from

    August to July this year, causing Dubai hotels to experience a decline in hotel performance in

    August 2014.

    PERFORMANCE IN SEPTEMBER

    In September 2014, four markets recorded ADR increases exceeding 10%. ADRs in Sharm El

    Sheikh (Egypt) expanded the most, by 18.2%2to $50.39 in September 2014, whereas those in

    Cairo (Egypt) improved 12.7%1to $107.86. The relative stability in Egypt in recent months was

    reflected in the performance of hotel markets across the country.

    Jeddah (KSA)s ADRs advanced 14.7%1 to $269.52 in September 2014. The city continues to

    lead as one of the regions high-growth hospitality markets, with robust gains in performance

    levels.

    ADRs in Muscat (Oman) improved 11.8%1to $205.72 in September 2014.

    Dubai (UAE) reported a rare decline in ADR of 3.2%2 to $231.36 during the month, whereas

    Riyadh (KSA)sADRs fell to $236.33 in September due to increased competition in the industry.

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    REVENUE PER AVAILABLE ROOM (REVPAR)

    PERFORMANCE IN JULY

    Two markets experienced RevPAR growth exceeding 15.0% in July 2014. Cairo (Egypt)sRevPAR

    increased 82.6%1

    to $30.57, driven by improved occupancy rates, coupled with a rise in ADR.RevPAR in Manama (Bahrain) advanced 20.1%1to $72.94 in July 2014.

    Amman (Jordan)sRevPAR declined 21.4%1in July 2014 to $54.86, posting the largest decrease

    in the region, primarily impacted by lower occupancy rates.

    PERFORMANCE IN AUGUST

    In August 2014, four markets reported RevPAR growth of more than 20.0%. Cairo (Egypt)s

    RevPAR increased by $42.81 to $63.65, whereas that of Riyadh (KSA) rose 28.7%1 to $103.45,

    driven by higher occupancy rates, coupled with stronger ADR.

    RevPAR in Manama (Bahrain) sustained stable growth over the previous month, increasing

    24.1%1 to $110.52, whereas Jeddah (KSA)s RevPAR improved 21.2%1 to $206.23, driven by

    higher occupancy rates and ADR in August 2014.

    PERFORMANCE IN SEPTEMBER

    The continued recovery in Egypts political scenario resulted in increased occupancy rates and

    stronger ADR. The improved performance levels helped Sharm El Sheikh record the largest

    RevPAR growth of $24.62to $39.15 vis--vis the same period last year. CairosRevPAR also rose

    by $31.91to $55.82 during September 2014.

    RevPAR in Jeddah (KSA) and Abu Dhabi (UAE) increase 21.9%1 and 14.0%2 to $216.34 and

    $98.76, respectively, driven higher occupancy rates and ADR.

    Doha (Qatar)sRevPAR increased 12.2%1to $127.50 in September 2014.

    Despite a decline in ADR level, RevPAR in Riyadh (KSA) increased 7.6%2over 2013 to $163.45, as

    Riyadh hotels returned to business after the summer months.

    RevPAR in Dubai (UAE) decreased 0.5%2to $180.88, driven by lower ADRs in September 2014.

    Table 1: Statistics in key MENA countries3

    Occupancy ADR Q-o-Q change

    Country JulSep 2014 JulSep 2013 JulSep 2014 JulSep 2013

    Occupancy

    (pps) ADR (%)

    Egypt 57.5% 32.6% EGP514.3 EGP429.3 24.9 19.8%

    Saudi Arabia 59.9% 51.1% SAR946.4 SAR916.7 8.7 3.2%

    UAE 63.5% 63.7% AED567.2 AED578.6 (0.3) (2.0%)

    3STR Global Data, Middle East/Africa Hotel Sector Performance for July, August, September 2014, ArancaAnalysis

    Denotes increase in parameter Denotes decrease in parameter

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    03Kuwait Tourism Industry4Kuwaits tourism industry is witnessing a significant increase, with international

    tourist arrivals projected to reach 0.4 million by 2024. Transport infrastructure

    developments and fast-tracked tourism projects are expected to position Kuwait as a

    tourist destination.

    International tourist arrivals to increase to 440,000by 2024:In 2014, Kuwaits travel and

    tourism industry ranked 70thworldwide, in terms of absolute contribution to GDP. The

    World Travel & Tourism Council (WTTC) forecasts the number of international tourists

    visiting Kuwait to reach 440,000 by 2024 from 270,000 in 2014, with revenues expanding

    at a CAGR of 4.0% to KWD236.6 million during 201424.

    Direct contribution to GDP to reach KWD882.7 million by 2024:The travel and tourism

    industrys direct contribution to GDP is projected to increase at a CAGR of 6.3% to

    KWD1,482 million (1.8% of GDP) by 2024 from KWD758.3 (1.5% of GDP) in 2014.

    Leisure tourism comprises major share: In 2014, inbound and domestic tourists spent

    KWD1,350.4 million on travel & tourism. Leisure tourism contributed the majority (77% or

    KWD1,040.2 million) to spending, whereas business travel accounted for the remainder

    (23% or KWD310.2 million).

    Leisure spending to grow faster than business spending: Leisure travel spending is

    anticipated to increase 12.2% y-o-y to KWD1,167.2 million in 2014 and subsequently rise

    at a CAGR of 6.5% to KWD2,194.1 million by 2024. In contrast, spending on business

    travel is anticipated to grow 8.9% y-o-y to KWD337.7 million in 2014 and expand at a

    slower CAGR of 5.4% to KWD574.1 million by 2024.

    Investment in travel & tourism industry to improve 5.6% in 201424:Capital investments

    in travel & tourism are estimated to grow 17.3% y-o-y to KWD192.4 million in 2014.

    During 201424, investments would expand at a CAGR of 5.6% to KWD330.9 million.

    Infrastructure development to stimulate growth: The Government has developed a

    long-term national plan to attract tourists and investments to the tourism sector.

    o An amount of $13 billion was allocated to transport infrastructure.

    4WTTC and Desk Research

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    MENA Tourism and Hospitality ReportQ3 20148

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    04Theme: Green Tourism5Green tourism in the Middle East is increasingly gaining importance as more

    countries become eco-conscious. The UAE is the regions eco-tourism hub; however,

    other countries, such as Egypt and Jordan, are gradually moving toward eco-tourism

    Eco-travelers constitute over 1/10th

    of leisure tourists in the Middle East: Green tourismor Eco-tourism is low-impact tourism that involves traveling into natural environments

    that responsibly protect the areas nature and culture. According to an ecotourism

    survey conducted by Market Vision, a Dubai-based tourism research specialist, eco-

    travelers account for more than one-tenth of the Middle Easts leisure travelling

    population in 2013. Eco tourism is gaining prominence in the Middle East and has

    significant potential for growth as more tourists are becoming eco-conscious.

    UAE, the preferred destination for eco-tourism: The environment and tourism sectors are

    two of the emirates four key sectors identified as major growth areas.

    o

    UAE leads the eco-tourism initiative in the MENA region and is implementing

    various eco-tourism projects, such as Kalba Eco-tourism project, the Sir Bu Nuair

    Island project, Al Jabal Resort, The Chedi Khorfakkan, and Al Majaz Waterfront.

    Furthermore, Abu Dhabis latest attraction is eco -boat cruises, also known as

    Eco Donuts.

    o The UAE Green Festival, the first international event of its kind in the emirate, is

    aimed at highlighting the importance of preserving the environment and

    developing sustainable green practices. The festival, in accordance with UAE

    Vision 2021, took place from March 16 to April 16, 2014. It comprised several

    initiatives such as green hotels, green restaurants, and various events,

    including an eco-friendly fashion show, the Green Auto Show, and the Green

    Jobs Fair.

    o The Dubai Department of Tourism and Commerce Marketing (DTCM)

    launched the Think Green initiative to promote the concept of green

    economy in the emirate through seminars and workshops and improve service

    standards in the green tourism industry. Through this initiative, the DTCM

    successfully reduced the level of carbon-dioxide emissions generated by the

    tourism industry by 20% in 2012. Dubai currently has more than 576 green

    5Desk Research

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    teams in hotels and more than 1,500 tourism industry professionals trained

    under this program.

    Green tourism in Egypt: Egypt currently spends EGP 100 billion per annum (~20% of its

    overall budget) on energy subsidies. The Egyptian Minister of Tourism signed a protocol

    with the Egyptian Hotels Association and the Solar Energy Development Association inMay 2013, effective one year after signing the protocol, to provide 100,000 Red Sea

    hotel rooms with solar energy for five years, to reduce the consumption of non-

    renewable energy. This initiative is forecast to result in a 30% reduction in hotels

    electricity bills and save the country EGP 164 million in energy subsidies. Furthermore,

    the Tourism Minister plans to expand the green initiative along the Nile to combat

    pollution to the river.

    El Gouna, MENAs first carbonneutral city:El Gouna, a resort city on Egypts Red Sea

    Riviera, is set to become MENAs first carbon neutral city. This project is an initiative

    taken by the government to achieve a significant breakthrough in green tourism,

    enhance Egypts global image, and attract tourism projects. El Gouna is already titled

    Egypts most environment-friendly vacation destination and was chosen as the

    location for the Green Star Hotel Initiative (GSHI). Priority projects include conservation

    of natural resources, such as clean beaches and marine life, which support the

    nations eco-tourism market.

    Eco-tourism in Jordan: The Royal Society for the Conservation of Nature and USAID

    bolstered the increase in ecotourism in Jordan and currently oversee 10 protected

    eco-tourism sites. Revenue from eco-tourism increased 10% y-o-y to JD831,336 in 2012.

    There is substantial future potential and the industry is forecast to generate 50,000 jobs

    in the next 10 years.

    Eco-tourism in Bahrain: Manama was declared the Asian Capital of Tourism 2014 and

    has been the Capital of Asian Culture for the last three successive years. The Bahrain

    Ministry of Culture initiated a Tourism Strategy 201518, which necessitates an

    experience-led approach to drive eco-tourism. Eco-tourism activities include cultural

    attractions, such pearl diving explorations, coupled with nature trails and stays at eco-

    lodges. Furthermore, the ministry aims to position the Hawar Islands, a unique eco-

    system that draws thousands of tourists annually, as an eco-tourism destination.

    Eco-tourism in Oman: The Regional Office for West Asia is working with the Sultanate of

    Omans Ministry of Tourism to strengthen the ecotourism sector. Two coastal areas

    were selected as eco-tourism sites: Bandar al Khayran and Wadi Darbat. Turtle and

    whale watching and desert camping are the major attractions of this eco-tourism

    initiative.

    Green tourism in Saudi Arabia: According to the World Tourism Organization, desert

    tourism is the newest frontier in eco-tourism. The Saudi Commission for Tourism and

    Antiquities (SCTA) aims to transform Saudi deserts into eco-tourism areas. Furthermore,

    a Saudi native woman has created various green tours and was licensed in 2014 to

    operate tours in Makkah, Jeddah, and Taif for eight years.

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    Disclaimer:

    This material is exclusive property of Aranca. The information, opinions, estimates,

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    information. This newsletter is intended for the personal use of qualified users and

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    modified or reproduced in any format without explicit written permission of Aranca.

    2014, ARANCA. All rights reserved.

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