The UAE's hospitality sector is gearing up for one of its busiest periods, with the country's hotel construction pipeline forecast to peak in 2017, and experts noting that the momentum will carry over into 2018.

According to the Ventures GCC Hotel Market Overview, the value of the GCC hotel sector's projects expected to be completed in 2017 is worth $9.51 billion - an increase of $8.24 billion over 2016. The growth is driven by a robust pipeline of hotel construction projects. The UAE demonstrates the largest market in terms of construction projects lined up for completion, followed by Saudi Arabia and Qatar.

The report found that at $4.05 billion, the UAE is likely to take the lead in expected projects to be completed in 2017, followed by Saudi Arabia at $3.32 billion and Qatar at $1.04 billion.

The UAE's hotel construction pipeline is forecast to peak in 2017 and 2018 as the country gears up for the Expo 2020. Experts forecast 2017 and 2018 to be the busiest years, with 56 project openings in 2017 and 58 openings in 2018. Dubai and Abu Dhabi will continue to lead in hotel construction across the UAE. In the hotels sector, a further 28,900 rooms are predicted to be delivered in Dubai over the next two years as capacity expands in the run-up to the event.

The hotels market is expected to pick up pace, with three-and four-star hotels likely to compete with the luxury hotel segment. With a slew of new hotel projects, refurbishment of existing structures has gained prominence. Many property owners and hotel operators see the value in refurbishing their assets to stay up-to-date and be able to compete with new hotel rooms coming to the market, especially in the lead up to important events, such as Expo 2020 and the Fifa World Cup 2022.

Chris Nader, vice-president of development at Shaza Hotels, noted that intra-regional travel between GCC countries is increasing, with families preferring to take shorter and more frequent holidays, and hence looking for leisure destinations in the region. Dubai, he said, has clearly established itself as the leader in terms of family holidays, but it is facing more and more competition from neighbouring destinations such as Ras Al Khaimah, Muscat and Salalah.

"Shaza Hotels is focusing on the GCC family market, be it in the resort or city hotel segment, and we are opening this year's hotels in three of these destinations. It is also important to look at the domestic Saudi market, which is travelling more frequently now within the country. This has created opportunities for us not only in the main cities like Jeddah, Riyadh and Khobar, but also in secondary destinations such as Taef, Yanbu and Jizan," he told Khaleej Times.

Ernst & Young's April 2017 Mena Hotel Benchmark Survey Report found that the Mena hospitality industry experienced mixed results in April 2017 as higher occupancies, yet lower average room rates affected the overall revenue per average room (RevPAR).

"Dubai experienced an increase across all KPIs, including the highest RevPAR of $273, an increase of 18.7 per cent when compared to last year. Dubai also saw the highest occupancy in April at 88 per cent and the highest average room rate of $310," said Yousef Wahbah, Mena head of transaction real estate at EY. "Abu Dhabi's hospitality market witnessed a drop in RevPAR by 4.8 per cent in April 2017, which can be attributed to the drop in ADR from $133 in April 2016 to $120 in April 2017. However, occupancy increased by 4.5 per cent in April 2017 when compared to the same month last year."

"With the start of Ramadan at the end of May, it can be expected that Mena cities will experience a softer performance until the Eid holidays at the end of June," he added.

The shift towards more diversified offerings was also highlighted by Marwan bin Jassim Al Sarkal, CEO of Shurooq. The entity recently launched a new brand of hotels that will be known as the 'Sharjah Collection'.

The luxurious lodge and B&B-style properties will spotlight Sharjah's eco-tourism and heritage sights being developed by Shurooq. Over 94 per cent of the emirate's hotels are based in Sharjah, while the remaining six per cent of hotel establishments are located across Khorfakkan, Kalba and the Eastern region. Last year, four and five star hotels accounted for 70 per cent of the total revenues generated from hotels in Sharjah, indicating a large return on investment within these categories.

In the first phase of development, the three hotels under the Sharjah Collection brand will be reformed to deliver a unique hospitality experience.
"Sharjah is rich with sights and is a popular destination, especially among tourists from the GCC countries, who desire luxury hospitality facilities in the emirate. Sharjah has a strong advantage in leading the tourism and hospitality sector. Thus, Shurooq has established a new hospitality entity, which will introduce a plethora of new cultural experiences and facilities in the emirate and work towards attracting both investments and tourism experiences," Al Sarkal said.

Source: Khaleej Times