Middle East 2011 - Hospitality Net · 2011-05-23 · Overall, investment in budget and four-star hotels is gaining momentum across most cities in the Middle East. A total of 30 branded

2011 MIDDLE EAST HOTEL SURVEY SHIFTING SANDS

APRIL 2011 | PRICE US$250

Hala Matar ChoufanyManaging Director

HVS Dubai | Liberty House Building, DIFC, 7th Floor, Offi ce 715, Dubai, UAE

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PAGE 2 | 2011 MIDDLE EAST HOTEL SURVEY

HighlightsWhile the global economies cautiously stepped onto the road to recovery in the second half of 2010, current unrest in certain parts of the Middle East and soaring oil prices are posing new questions about future hotel performance in several parts of the region.

Following the cancellation and suspension of several projects in 2009, 2010 witnessed the re-engineering and re-designing of projects that are now aligned with more reasonable expectations of each market’s potential for growth in the short to medium term. This shift also allows for the development of much-needed asset classes such as limited service and budget hotels that will support and enhance tourism potential in the future.

All in all, international visitation remained rather conservative in 2010 and an increase in regional and domestic tourism was recorded. The current unrest in certain parts of the Middle East will displace high levels of demand to those cities that are now considered ‘safer’.

Growth in corporate and leisure visitation came as a result of improved economic conditions during the second half of 2010, coupled with more affordable rates across many cities.

As a result, 22 cities achieved higher occupancies when compared to 2009, despite the opening of a number of new hotels.

In line with occupancy growth, 23 markets recorded average rate growth while the remaining markets struggled to improve rates when occupancy was coming under pressure.

The Middle East Hotel Survey 2011 includes 352 hotels and some 93,500 hotel rooms (an increase of 36% on last year) across 52 cities in the Middle East, making it one of the most reliable benchmarking surveys in the region.

Overall, investment in budget and four-star hotels is gaining momentum across most cities in the Middle East.

A total of 30 branded hotels, or approximately 8,000 hotel rooms, opened in the region in 2010, of which 65% opened in the UAE alone.

Several markets remain undersupplied and underdeveloped and there are large opportunities for investors and developers. Damascus, Beirut, Erbil, Yemen, Kuwait and Oman have not seen much growth in hotel supply over the last few years and are becoming increasingly attractive for investors and operators.

Asset conversion and brand conversion seem to define the new growth strategy of operators, especially in those markets that offer little opportunity for new development in the current limited investment climate.

By aligning the product offering and service levels with market needs, the market share of hotels is being redefined in a number of cities.

Dubai continues to scale new heights with a record 47.2 million passenger movements in 2010, a 17.6% increase on the 40 million passenger movements recorded in 2009.

Saudi Arabia, the FDI magnet, attracted more than half of the total Foreign Direct Investment in the Middle East in 2009 and unofficial data suggest the same was true in 2010.

Saudi Arabia, the UAE and Qatar remain at the forefront of hospitality development.

Tourist arrivals to the Middle East increased by 14% in 2010, registering approximately 56.6 million tourists.

Winners and LosersIn 2010, most Cities in Egypt saw occupancy levels grow as a result of improved regional leisure travel. Al Giza was the winner with growth of 19 percentage points (pp) followed by Dahab (9 pp), Al Quseir, Red Sea and Sharm El Sheikh (7 pp) and Cairo Heliopolis and Taba (6 pp). Cairo City Centre marginally increased occupancy by 2 pp while Cairo Pyramids’ occupancy fell by just 1 pp.

In Jordan, all markets experienced an increase in occupancy after a strong dip in 2009. Aqaba, a predominantly leisure destination, grew by 12 pp, followed by the capital Amman at 6 pp and Petra at 5 pp.

After a sharp decline in 2009, Doha occupancy grew by 8 pp, driven largely by increased corporate visitation. With the announcement of the Doha 2022 World Cup, it is expected that corporate business will accelerate over the medium to long term.

Despite some 15 hotel openings in Dubai in 2010, and speculation about a double dip in the market, marketwide occupancy grew by 3 pp, reaching 72%, driven primarily by intraregional visitation as well as an increase in corporate demand. All other emirates suffered occupancy drops in 2010 as they faced stiffer competition from Dubai. Abu Dhabi’s occupancy fell by 9 pp and we expect further pressure from new supply in 2011 to bring marketwide occupancy in Abu Dhabi to the low-to-mid 50s.

In Syria, all markets experienced occupancy growth; Saidnaya achieved a 15 pp growth while Damascus and Latakia achieved 3 pp and 4 pp growth, respectively.

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FIGURE 1: PERFORMANCE OF FIRST CLASS HOTELS IN THE MIDDLE EAST

2011 MIDDLE EAST HOTEL SURVEY | PAGE 3

Neighbouring Beirut experienced a 4 pp fall in occupancy, despite an increase in visitation to the city. The most recent addition to supply in Beirut in 2010 was Le Gray Hotel and the Four Seasons Hotel, both of which are at the high end of the market.

New emerging markets such as Erbil are experiencing growth as demand currently exceeds the supply of quality accommodation in the city.

Sanaa, the capital of Yemen, has seen deteriorating occupancy levels as a result of the ongoing tension and political instability over the last few years.

All markets in Saudi Arabia have seen drops in occupancy levels ranging from 1 pp in Jeddah to 30 pp in Al Qassim. Riyadh experienced a 4 pp drop in occupancy while supply has grown by approximately 10%.

Some 23 cities registered moderate increases in average rate; topping the list were those cities that have previously achieved an average rate of less than US$75.

Owing to a shortage in quality accommodation, marketwide average rate grew by 10% in Erbil in 2010.

In the current economic climate and with a number of new hotels still coming on stream in the near term, we project average rate to remain stagnant over the next few years.

Very modest, if any, RevPAR increases were witnessed in 2010, resulting in a lower value per key for most markets in the Middle East.

Macroeconomic IndicatorsFollowing the decline in GDP growth in most cities in 2009, the start of the recovery was evident in 2010, notably during the second half of the year. Qatar witnessed the highest growth in GDP at 14%, followed by Lebanon at 8%. Most other cities grew between 3% and 5%. The overall outlook for 2011 at the beginning of the year remained positive, albeit the unrest that is currently being witnessed in several cities will undoubtedly hinder growth, especially

if the situation endures. On the other hand, the recent surge in oil prices is expected to support the GDP projections of oil-rich economies.

Egypt, Qatar and Yemen grappled with double-figure inflation in 2010, and this trend is expected to continue. The current unrest in Egypt and Yemen will further define the macroeconomic trend for these countries and we expect a revision of these estimates shortly. The increasing oil prices are causing valid concerns in regard to the increase in inflation across the world’s economies and, as we have seen in the past, the snowball effect cannot be ruled out in the regional economies.

Oil-rich Kuwait and Qatar lead the region in terms of budget balance, despite significant public spending by their governments in building infrastructure.

Foreign Direct InvestmentSaudi Arabia, the FDI magnet, attracted more than half of the total Foreign Direct Investment in the Middle East in 2009. A large population base, rich oil reserves and strong macroeconomic indicators make it the undisputed leader, followed by UAE and Egypt. Unofficial data suggest that Saudi Arabia once again tops the list in 2010.

Qatar and Lebanon feature as other leading countries for FDI. With the upcoming Doha 2022 World Cup, Qatar is expected to attract a larger share of FDI in the next ten years while Lebanon needs to pave the way for political stability in order to consolidate on FDI gains in future years.

2008 2009 2010 2011F 2008 2009 2010 2011F 2008 2009 2010 2011F 2008 2009 2010 2011F

Bahrain 6.3 3.1 3.5 4.1 3.2 2.7 2.8 2.9 7.5 0.8 0.3 0.2 10.3 6.4 2.2 0.1

Egypt 7.2 4.7 5.1 4.1 18.3 11.9 11.1 14.6 6.8 6.6 8.0 12.0 0.8 1.3 0.3 1.5

Iraq 7.8 4.5 5.5 6.5 2.8 2.8 2.5 5.6 — 10.0 1.4 7.4 — 2.1 4.1 12.9

Jordan 5.8 2.4 3.2 3.8 9.4 2.7 5.9 3.1 9.6 12.3 8.4 8.0 12.1 6.7 4.3 3.0

Kuwait 8.5 4.6 3.4 4.2 9.0 2.1 4.5 4.5 28.3 17.7 24.1 22.5 41.1 20.1 37.6 35.9

Lebanon 9.3 8.5 7.5 5.9 5.5 3.4 4.0 2.8 9.5 8.6 5.4 7.6 14.4 21.9 19.3 14.5

Oman 12.8 2.0 3.6 3.8 12.5 3.5 4.0 4.5 9.0 3.0 7.9 7.2 9.1 4.6 4.9 5.2

Qatar 11.7 9.5 14.0 15.8 13.2 3.4 11.5 14.4 10.0 2.9 13.6 23.1 13.0 7.3 22.3 25.5

Saudi Arabia 4.2 0.6 3.8 3.9 9.9 5.1 5.4 6.3 32.5 6.1 6.6 6.2 27.5 6.1 15.9 14.3

Syria 4.3 5.0 4.0 4.6 15.7 2.5 4.4 7.2 2.5 2.8 3.2 0.6 0.1 0.7 1.6 2.0

UAE 7.4 2.7 2.1 3.5 12.3 1.6 0.9 2.5 14.2 2.6 2.2 3.5 14.0 1.8 2.4 4.9

Yemen 3.2 3.8 5.2 3.0 19.0 5.4 12.2 13.3 1.1 9.4 5.1 6.4 4.0 7.8 6.6 7.4

Real GDP Growth (%) Consumer Price Inflation Budget Balance Current Account Balance

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Bahrain 2,915 1,756 1,794 257

Egypt 10,043 11,578 9,495 6,712

Iraq 383 972 1,856 1,070

Jordan 3,544 2,622 2,829 2,385

Kuwait 122 116 — 145

Lebanon 3,132 3,376 4,333 4,804

Oman 1,597 3,332 2,359 2,211

Qatar 3,500 4,700 4,107 8,722

Saudi Arabia 17,140 22,821 38,151 35,514

Syria 659 1,242 1,467 1,434

UAE 12,806 14,187 13,700 4,003

Yemen 1,121 917 1,555 129 Source:U

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FIGURE 2: ECONOMIC INDICATORS

FIGURE 3: FOREIGN DIRECT INVESTMENT (US$ MILLIONS)


Worldwide Tourist Arrivals and Middle East GrowthThe Middle East bounced back sharply in 2010 with 14% year-on-year gains in tourist arrivals – twice the growth percentage for the entire world and the highest across all continents. Asia followed closely with a 13% increase on 2009 figures. Europe found itself trailing behind with a modest 3% gain on 2009 tourist arrivals.

Various factors have contributed to the growth in visitation to the Middle East ranging from rate corrections in most cities making them much more affordable to increases in the number of regional budget airline flights and the introduction of additional routes to Asia, Americas and Europe by the main Middle Eastern carriers, such as Emirates, Itihad and Qatar Airways.

Airport Passenger Movements Dubai continues to scale new heights with a record 47.2 million passenger movements in 2010, a 17.6% increase on the 40 million passenger movements recorded in 2009. Jeddah, without any significant gains in 2010, marginally increased its year-on-year passenger movements to rank second, with more than 15 million passengers, just enough to edge out Doha to third place. In terms of percentage gains over 2009 passenger traffic, Erbil witnessed a 28% increase, Muscat 26%, Amman 14%, Abu Dhabi 12%, Beirut and Riyadh 10%, and Sharjah 9%. Plans to extend airports are still underway in most Middle Eastern cities albeit the delays in commencing and completing these projects.

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World 806,000 846,000 908,000 924,000 887,000 946,400 7%

Africa 37,300 40,300 44,900 46,900 49,200 52,200 6%

Americas 133,500 136,300 142,500 147,600 140,200 151,400 8%

Asia Pacific 155,400 167,100 185,400 188,300 184,500 208,500 13%

Europe 441,000 460,800 488,000 488,500 459,200 473,000 3%

Middle East 39,200 41,000 47,500 52,900 53,900 61,400 14% Source:W

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FIGURE 5: ARRIVALS TO THE MIDDLE EAST (000S)FIGURE 4: WORLDWIDE TOURIST ARRIVALS

2005 2006 2007 2008 2009 2010 % Change

Abu Dhabi 4,940,502 4,789,536 6,565,556 8,687,712 9,374,631 10,500,000 12%Amman 3,272,020 3,506,061 3,850,347 4,477,811 4,770,769 5,430,000 14%Beirut 3,179,753 2,739,606 3,326,433 4,039,560 4,952,899 5,464,038 10%Cairo 10,089,339 10,665,708 12,475,605 14,272,180 14,305,800 14,305,800 0%Damascus 6,125,833 6,009,485 5,991,627 5,976,016 6,091,889 6,091,889 0%Dammam 3,013,240 3,341,092 3,840,671 3,883,700 4,149,598 — —Doha 7,191,991 8,733,160 10,795,417 12,214,870 13,129,467 15,000,000 14%Dubai 23,922,292 27,925,522 33,481,257 36,592,307 40,104,149 47,200,000 18%Erbil 17,898 67,698 131,055 146,589 169,539 216,728 28%Jeddah 13,239,144 13,265,071 14,356,433 15,275,144 15,291,768 15,334,768 0%Kuwait 5,381,258 6,053,094 6,910,309 7,226,345 8,125,617 8,125,617 0%Manama 1,693,207 1,834,158 1,966,922 2,218,536 2,337,737 2,279,952 2%Medina 1,641,871 1,749,118 2,009,790 2,421,505 2,703,859 — —Muscat 3,383,042 4,521,343 4,050,005 3,918,136 4,556,502 5,751,516 26%Ras al Khaimah 67,555 98,198 141,206 208,213 19,291 — —Riyadh 10,532,752 10,962,043 11,709,230 10,804,881 12,635,739 13,919,000 10%Sanaa — — — 113,209 393,322 — 247%Sharjah 2,237,546 3,064,396 3,976,860 5,008,105 5,631,786 6,161,737 9%

The 2010 figures are reported based on the sources other than ACI Report

The 2010 figures in in italics are estimations

*In regards to airport arrivals, Dubai has been the market leader with over 40 million passengers arriving in 2009. J

Bibliography AP

Abu Dhabi http://www.zawya.com/story.cfm/sidZAWYA20101214061623/?relcontent=ZAWYA20101214061623

Doha http://www.zawya.com/story.cfm/sidZAWYA20101219040858?q=new doha international airport arrivals 2010

Syria http://www.zawya.com/story.cfm/sidZAWYA20110125064628?q=syria airport arrivals 2011

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Egypt http://www.hotelmule.com/network/space.php?uid=185&do=blog&id=754

Kuwait http://www.thefreelibrary.com/Kuwait+International+to+increase+capacity. a0250251793

Jeddah http://en.wikipedia.org/wiki/King_Abdulaziz_International_Airport

Riyadh http://en.wikipedia.org/wiki/King_Khalid_International_Airport

Beirut http://www.ansamed.info/en/libano/news/ME.XEF12261.html

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FIGURE 6: AIRPORT PASSENGER MOVEMENTS


Sanaa, Yemen witnessed more than a twofold increase in passenger traffic between 2008 and 2009; however, these figures are outliers and the absolute increase in passenger traffic is rather low, despite the healthy percentage gain.

Market SegmentationDammam, Al Khobar, Riyadh, Doha, Abu Dhabi and Manama are markets predominantly driven by corporate demand. Cities such as Muscat, Dubai, Beirut, Amman and Cairo attract a balanced share of corporate and leisure demand.

The Free Independent Traveller (FIT) segment remains a lucrative source of income for the majority of cities in the Middle East, including Amman, Beirut, Cairo and Dubai. On the other hand, Dubai, Amman and Manama enjoy a high level of meeting, incentive, conference and exhibition (MICE) business. Dubai, although commanding only 15% of its total demand from this segment, in absolute terms is still the region’s MICE market leader.

Source MarketsVisitation to Middle Eastern countries originates primarily from neighbouring Arab countries (owing to the short journey time) and Europe (owing to the number and frequency of flights between the two). Markets such as Manama, Amman, Dammam, Damascus and Saudi Arabia received more than 60% of their visitation from Arab countries and are heavily reliant on the economic condition and trends of the Arab region.

European source markets witnessed a significant decline following the global economic slowdown in late 2008 to mid-2010; however, with a correction in average rates, most of the Middle Eastern destinations became more attractive to a wider base of European tourists and the second half of 2010 witnessed an increased inflow from these source markets. Cairo, Oman, Beirut, Abu Dhabi, Ras al-Khaimah and Dubai attract a large share of visitation from Europe.

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FIGURE 7: MARKET SEGMENTATION

FIGURE 8: VISITATION FROM ARAB COUNTRIES 2010

FIGURE 9: VISITATION FROM EUROPE 2010


Distribution of International BrandsDubai retains top position with an impressive number of hotels and hotel rooms in the five-star category justifying its position as a luxury destination. Cairo ranks second followed by Abu Dhabi, Qatar, Beirut and Jeddah.

In the international four-star category, Dubai once again leads the pack, followed by Manama and Abu Dhabi. More recently, several Middle Eastern markets have seen the opening of four-star hotels, which proved to be more resilient during economic downturns.

There is limited supply of internationally branded three-star hotels in the Middle East. Few internationally managed properties are currently established in the UAE, and notably Dubai, while most other markets have a number of locally managed budget hotels.

Proposed Supply andNew OpeningsThe Middle East is set to attract additional operators and hotels in the coming three to five years. A total of 190 hotels – equating to approximately 61,000 hotel rooms – is currently under design or construction for the various cities.

The UAE will attract 30% of the proposed supply with some 56 hotels, 24,000 hotel rooms, in the coming four years.

Not surprisingly, Saudi Arabia ranks second with a planned 41 hotels or some 12,300 hotel rooms. Beirut will have the least number of confirmed properties and each is set to see the opening of five hotels, or approximately 1,000 keys. The most recent addition in Kuwait will be the Missoni hotel, opening towards the end of May 2011. This is the first Missoni hotel to open in the Middle East. The average size of proposed hotels ranges from 200 rooms in Beirut to 400 rooms in Dubai.

Questions have been raised over the effect of additional supply entering the market in next three to five years and the resultant impact on marketwide occupancy and

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UAE64%

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Egypt6%

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FIGURE 10: TOTAL NUMBER OF BRANDED HOTELS FIGURE 11: TOTAL NUMBER OF BRANDED HOTEL ROOMS

FIGURE 12: DISTRIBUTION OF NEW OPENINGS 2010

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FIGURE 13: DEVELOPMENT PIPELINE BY NUMBER OF HOTELS AND NUMBER OF ROOMS


average rate. We estimate reasonable growth in demand for transient accommodation for most of the markets in the foreseeable future. We expect average rate to remain stagnant in the more established market and to increase conservatively in markets welcoming high-end and luxury operators.

Some 16 hotels opened in Dubai in 2010, ranging for limited service to luxury brands. The Armani hotel, which occupies a number of floors in Burj Khalifa, opened in May 2010. Other hotels that entered the market include ibis, Pullman, Sofitel, Centro, Rotana, Mövenpick, Ramada and Holiday Inn Express. Dubai accounted for around 50% of the new hotel openings in 2010. Saudi Arabia saw the entry of several operators, including IHG, Accor, Hilton and Wyndham.

Operator PresenceDubai is the leading destination with at least 16 international flags currently in operation in the market. Cairo ranks next and has attracted some 12 international operators, followed closely by Doha (11), Kuwait (10) and Abu Dhabi (9). Markets such as Dammam, Damascus, Sharjah, Ras al-Khaimah and Erbil have a large number of locally managed properties and present large opportunities for international operators to grow either through new developments or conversions.

While most of these cities are expected to have additional brands in the near future, some of the destinations – like Damascus in Syria and Erbil in Iraq – will be closely monitored by operators for geographical expansion.

IHG, Hilton, Marriott, Rotana and Starwood will add more than 8,000 rooms each in the next five years. Both Accor and Mövenpick will also expand their geographical presence with just under 6,000 rooms each while Kempinski, Rezidor and Wyndham will bring a total of 11 hotels (or 3,000 rooms) each.

Mandarin Oriental has signed a management agreement for Doha and Abu Dhabi while the Four Seasons is expected in Abu Dhabi, Manama, Kuwait, Doha and Oman. Two Fairmont properties are expected to open in Saudi Arabia, with further hotels in Oman and Fujairah. On the other hand, Kempinski is to intensify its presence with upcoming properties in the UAE, Bahrain, Syria, Saudi Arabia, Beirut and Oman.

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AccorBanyan TreeDusitFour SeasonsFRHIHiltonHyattIHGJumeirahKempinskiMandarin OrientalMarriottMillennium & CopthorneMövenpickRezidorRotanaStarwoodThe AddressWyndham

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FIGURE 15: EXISTING AND PROPOSED OPERATOR PRESENCE BY MARKET 2010

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FIGURE 14: PROPOSED NEW SUPPLY BY OPERATOR (NUMBER OF ROOMS)


Infrastructure Projects Airport Expansion

Abu Dhabi

Total Infrastructure Investment – US$16.8 billionThis investment includes the construction and expansion of roads and substations, infrastructurepackages catering to new developments such as Yas Island, Saadiyat Island, Raha Beach Complex andthe introduction of a 350 km light railway connecting major regions within Abu Dhabi.Notable Developments:Abu Dhabi Light Rail Project – This project calls for the design and construction of a high speed

railway that includes 38 stations amongst various developments and regions of Abu Dhabi –US$3 billion

Abu Dhabi International Airport Expansion – US$1.7 billionThis expansion includes the introduction and implementation of a new baggage handling system,construction of a new terminal 2 building which will serve a million passengers a year and a new interimpassenger terminal dedicated to Etihad Airways.

Bahrain

Total Infrastructure Investment – US$16.7 billionThis investment includes roadworks, motorway upgrades, district cooling systems and rail networks,all helping to link various regions of Bahrain including Durrat Al Bahrain and the Financial Harbour.Notable Developments:Qatar Bahrain Causeway – Friendship Bridge linking Qatar and Bahrain – US$1.5 billionBahrain Rail Network – Monorails, trains and trams encompassing all districts in 3 Phases –

US$13 billion

Bahrain International Airport Expansion – US$4.8 billionThis expansion is looking to increase airport capacity from 7 million passengers to 17 millionspassengers by 2014, and then to 27 million passengers by 2038. This development includes upgradingthe existing terminals and all related facilities. The scope of work also includes recreational areas, hotelsand shopping centres.

Cairo

Total Infrastructure Investment – US$5.7 billionThis investment includes desert road extension, railway upgrades and the introduction of new metrolines.Notable Developments:Cairo Metro Line 2 to 6 – The introduction of new metro lines will further interconnect various

regions within Cairo, such as Heliopolis, Greater Cairo and the airport – US$5.3billion

Cairo International Airport Expansion – US$584 millionCairo International Airport has recently completed the development of a new terminal that has thecapacity to hold 11 million passengers. This expansion also includes the construction of a new 128metre control tower at the airport.

Dubai

Total Infrastructure Investment – US$23.2 billionThis infrastructure investment includes the construction and expansion of various roads and bridges,uprgrades to substations and infrastructure packages catering to developments such as Business Bayand DIFC. This investment also includes the design and construction of a tram system and thecompletion of the Green Line on the Dubai Metro.Notable Developments:Dubai Metro (Light Rail Transport) – This project includes the construction and execution of a

planned Blue Line that will connect Dubai International Airport and Jebel Ali Airport City and anextension/completion of the Green Line – US$10.7 billion

Al Maktoum International Airport Expansion – US$1.1 billionThis expansion includes the construction of a new passenger terminal that will accommodate 7 millionpassengers a year and the construction of a new cargo terminal along with all the services that areessential to the operation of the airport.

Dubai International Airport Expansion – US$2.3 billionThis expansion includes the construction of a new concourse at Terminal 3, a multi storey car park andthe refurbishment and maintenance of Terminal 2.

Jeddah

Total Infrastructure Investment – US$1.9 billionThis investment includes heavy roadworks to ease the flow of transport, substations, expansion andupgrades of main highways and the installation of numerous bridges across intersections.Notable Developments:13 New Tunnels and Bridges – This project includes the removal of several roundabouts within

Jeddah to ease the flow of traffic and decrease congestion with the city. It also includes theconstruction of an 800 metre tunnel on King Abdul Aziz Road – US$210million

King AbdulAziz International Airport Expansion – US$2.1 billionKing AbdulAziz International Airport has recently seen the development of the new Hajj terminals andfacilities which can now accommodate 3,500 passengers an hour instead of 1,250. Future expansionalso includes the introduction of a new terminal which will accommodate 30 million passengers a yearalong with the implementation of a railway system that will link the airport with the Mecca and Medinarailway.

JordanTotal Infrastructure Investment – US$872 millionThis investment includes the construction of a 28 km light railway connecting to Amman and Zarqaand the design/execution of a new Aqaba port

Kuwait

Total Infrastructure Investment – US$55.2 billionThis investment includes the construction of motorways, substations, transformers, a railway/metrosystem, major roads and seaport expansion.Notable Developments:Bubiyan Island Development (Seaport) – This project calls for the expansion of the seaport from

four berths to 60 berths by 2033 on Bubiyan Island in 3 Phases – US$18.1 billionKuwait Railway and Metro – This project calls for the construction of a 165 km metro within Kuwait

and the construction of a railway network connecting Umm Qasr in Iraq, Kuwait and Salemy (Kuwaitand Saudi Border) – US$25 billion

Mecca

Total Infrastructure Investment – $5.3bnThis investment includes the construction of a railway network, tunnels, roadworks, substations,district cooling and motorway upgrades and expansion to support various districts such as Kara,Mecca and Altaif.Notable Developments:Mecca Light Rail – A 19 kilometre railway system connecting the holy sites, with an ability to serve

90,000 passengers an hour – US$2.0 billionMecca Medina Railway – This project entails all the civil works involved in the 444 kilometre railway

between the holy cities – US$1.8 billion

Medina

Total Infrastructure Investment – US$533 millionThis investment includes the construction and expansion of primary roads within the Medina region,development of roads connecting to the industrial city and various substations (transmission).Notable Developments:King Faisal Road – This project calls for the completion of work on King Faisal Road; the scope of

work includes passenger subways and the extension of a primary tunnel (Manakha Tunnel) –US$92 million

Prince Mohammed bin Abdulaziz International Airport Expansion – US$650 millionThe capacity of Prince Mohammed bin Abdulaziz International Airport expansion is looking to beincreased to 12 million passengers by 2022 with the construction of a new terminal and runway and anupgrade of the existing facilities.

Muscat

Total Infrastructure Investment – US$999 millionThis investment includes the construction and expansion of roads within Muscat city, substations andport expansion.Notable Developments:Port Sultan Qaboos Expansion – This expansion calls for raising container terminal capacity at the

port – US$400 million

Muscat International Airport Expansion – US$10.8 billionThis expansion includes the maintenance and expansion of Manama International Airport's cargo andcatering facilities and increasing terminal capcity to 12 million passengers by 2014 and 50 millionpassengers by 2050, along with a new passenger terminal.

Riyadh

Total Infrastructure Investment – US$6.9 billionThis investment includes the construction of railway systems, major road expansions, substationupgrades and bridge works.Notable Developments:ADA Light Rail – The project calls for the design, supply, construction and operation of a light railway

system to serve Riyadh city. This railway will look to support 8,000 passenger an hour per track –US$3 billionPrincess Norah University (Riyadh Monorail) – This project involves the construction of a light

monorail connecting all the facilities within Princess Norah University – US$1billion

Sharjah

Total Infrastructure Investment – US$1.7 billionThis investment includes the expansion and construction of major roads, substations, bridges andtunnels.

Sharjah International Airport Expansion – US$112 millionThis expansion includes the renovation of the current facilities at Sharjah International Airport. It willinclude new departure and arrivals areas, car parking facilities, duty free and other aspects of theairport

FIGURE 16: INFRASTRUCTURE PROJECTS


Bahrain Manama 65 % 58 % 53 % 63 % 58 % 56 % 59 % 62 % 64 % 64 % 72 % 75 % 71 % 77 % 75 % 68 % 66 % 2 62 %Egypt Al Giza 52 45 64 19 54

Al Gouna 81 72 72 0 75Al Quseir 71 78 7 75Al Soukhna 37 41 46 5 41Alexandria 69 68 65 3 67Aswan 40 53 51 2 48Cairo City Centre 67 73 75 69 79 78 66 68 67 78 79 77 76 75 70 72 2 69Cairo Heliopolis 65 79 72 70 83 83 75 75 73 75 77 74 86 67 66 72 6 71Cairo Pyramids 58 66 66 47 70 76 61 62 61 73 76 75 80 86 76 75 1 65Dahab 54 61 70 9 62Hurghada 48 63 70 63 50 80 77 65 66 66 86 75 75 86 88 80 82 2 69Luxor 52 45 42 3 46Marsa Al Alam 79 71 64 7 71Nuweiba 84 85 84 1 84Red Sea 79 71 78 7 76Sharm El Sheikh 79 73 72 66 68 79 63 61 66 64 75 71 66 76 81 75 82 7 68Taba 74 74 80 6 76

Iraq Erbil 74 81 79 2 78Jordan Amman 61 74 71 61 56 56 59 44 45 57 72 70 58 64 66 57 63 6 58

Aqaba 73 41 53 12 56Dead Sea 68 55 57 2 60Petra 75 59 64 5 66

Kuwait Kuwait City 44 41 44 46 46 47 46 49 53 84 64 70 65 58 62 59 54 5 52

20062003 Average

% PointChange2009 102008 20102002 2004 20072005 20091994 1995 1996 1997 1998 20011999 2000

Lebanon Beirut 45 61 61 56 57 55 57 59 71 52 48 39 57 70 66 4 54Oman Muscat 67 66 64 71 56 57 55 62 59 57 69 80 74 67 69 54 58 4 64

Salalah 67 70 67 3 68Qatar Doha 61 75 80 78 72 61 58 56 60 72 72 71 71 71 70 58 66 8 64Saudi Arabia Al Jubail 86 64 22 75

Al Khobar 61 62 45 17 56Al Qassim 35 50 20 30 35Burayda 45 52 37 15 45Dammam 60 71 49 22 60Jeddah 68 64 61 58 60 59 63 59 57 53 54 61 64 73 77 73 72 1 61Mecca 60 55 54 1 56Medina 61 63 56 7 60Riyadh 66 62 61 62 63 62 60 61 65 64 55 62 70 71 74 67 63 4 61Taif 48 58 57 1 54Yanbu 43 37 6 40

Syria Aleppo 55 56 1 56Damascus 70 73 68 70 69 69 66 65 67 65 69 75 73 80 79 71 74 3 67Latakia 41 44 4 43Saidnaya 41 56 15 49

UAE Abu Dhabi 65 58 66 65 66 64 67 67 68 68 82 85 84 81 81 73 64 9 68Ajman 77 63 40 23 60Al Ain 71 69 69 0 70Dubai 74 69 74 73 70 70 74 71 76 79 86 82 84 87 81 69 72 3 72Fujairah 74 69 66 3 70Ras al Khamiah 81 67 67 0 72Sharjah 83 67 61 6 70

Yemen Eden 44 48 4 46Sanaa 49 39 33 6 40

Average 64 64 65 66 61 66 65 61 63 66 72 73 71 73 68 62 61 1Source: HVS Research

FIGURE 17: AVERAGE ANNUAL OCCUPANCY 1994-2010


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Bahrain Manama 86 87 92 90 93 102 105 103 119 122 132 177 196 249 259 205 209 2 % 6 %Egypt Al Giza 116 72 63 12 26

Al Gouna 89 89 0 0Al Quseir 67 60 10 10Al Soukhna 92 82 83 1 5Alexandria 124 110 100 9 10Aswan 57 71 79 11 17Cairo City Centre 73 72 78 78 80 86 85 77 75 75 87 99 137 160 194 144 26 5Cairo Heliopolis 59 62 61 62 62 68 65 59 60 63 67 77 107 108 121 93 23 3Cairo Pyramids 38 42 46 44 47 59 60 36 38 42 46 49 61 68 72 73 2 4Dahab 82 76 79 4 2Hurghada 67 39 41 44 30 34 41 35 30 32 40 47 46 41 49 45 49 10 2Luxor 46 47 88 87 38Marsa Al Alam 55 59 7 7Nuweiba 39 38 39 2 0Red Sea 89 84 77 8 7Sharm El Sheikh 51 49 53 52 35 44 45 41 37 39 42 52 54 53 81 80 82 2 3Taba 43 41 43 5 0



Kuwait Kuwait City 209 205 213 201 204 203 214 218 216 233 230 237 239 239 260 257 241 6 1Lebanon Beirut 166 173 143 129 110 101 110 154 168 116 110 78 143 281 263 6 3

Compound AnnualGrowth Rate 1994¹ 10

% Change2009 10






Yemen Eden 75 89 19 19S 70 104 106 2 23Sanaa 70 104 106 2 23

Average 98 87 101 101 95 206 207 204 202 206 215 235 248 276 192 178 171 8 % 4 %¹ Or the earliest year for which data are available Source: HVS Research

FIGURE 18: AVERAGE RATE 1994-2010 (US$)


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Bahrain Manama 56 51 49 56 54 57 62 64 76 78 95 133 140 193 195 139 138 1 % 6 %Egypt Al Giza 60 32 41 25 18

Al Gouna 64 64 1 1Al Quseir 48 47 1 1Al Soukhna 34 34 38 14 6Alexandria 86 75 65 14 13Aswan 23 38 40 6 33Cairo City Centre 49 53 58 54 63 67 56 52 50 59 69 77 105 120 136 104 23 5Cairo Heliopolis 38 49 44 43 52 57 49 44 44 47 52 57 92 72 80 67 16 4Cairo Pyramids 22 28 30 20 33 45 37 22 23 31 35 37 48 58 55 55 0 7Dahab 44 46 56 20 12Hurghada 32 24 29 28 15 27 31 23 20 21 34 35 34 35 43 36 40 12 2Luxor 24 21 37 74 24Marsa Al Alam 39 38 4 4Nuweiba 33 32 33 1 0Red Sea 70 60 60 1 8Sharm El Sheikh 40 36 38 34 24 35 28 25 24 25 32 37 36 40 66 60 67 12 3Taba 32 30 35 14 4



Kuwait Kuwait City 93 83 93 93 94 94 98 107 114 196 147 165 155 139 160 152 130 14 2Lebanon Beirut 75 105 88 73 62 56 63 91 119 61 53 30 81 197 174 11 7

% Change2009 10

Compound AnnualGrowth Rate 1994¹ 10






Yemen Eden 33 43 29 29S 34 40 35 13 1Sanaa 34 40 35 13 1

Average 63 56 66 66 58 135 135 125 127 136 155 171 175 202 130 111 104 6 % 4 %¹ Or the earliest year for which data are available Source: HVS Research

FIGURE 19: REVPAR PERFORMANCE 1994-2010 (US$)

About HVSHVS is the world’s leading consulting and services organization focused on the hotel, restaurant, shared ownership, gaming, and leisure industries. Established in 1980, the company performs more than 2,000 assignments per year for virtually every major industry participant. HVS principals are regarded as the leading professionals in their respective regions of the globe. Through a worldwide network of 30 offi ces staffed by 400 seasoned industry professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. For further information regarding our expertise and specifi cs about our services, please visit www.hvs.com.

HVS DUBAI has a team of experts that conducts our operations in the Middle East and North Africa. The team benefi ts from international and local backgrounds, diverse academic and hotel-related experience, in-depth expertise in the hotel markets and mixed-use developments in the Middle East and a broad exposure to international hotel markets. Over the last four years, the team has advised on more than 180 projects in the region for hotel owners, developers, lenders, investors and operators. HVS has advised on more than US$45 billion worth of hotel and mixed-use real estate projects in the region.

Note: No investment decision should be made based on the information presented in this article. For further advice please contact the authors.

Hala Matar Choufany is the Managing Director of HVS Dubai and is responsible for the firm’s valuation and consulting work in the MENA region. Hala is multi-skilled in the real estate and hotel industry and has worked

extensively in several markets throughout Asia, Europe, the Middle East and North Africa, having worked previously for the London and Singapore/Shanghai offices of HVS. Hala holds an MPhil from Leeds University and an MBA from IMHI (Essec- Cornell) University, Paris, France. Since joining HVS, she has worked on strategy related assignments and mid- and large-scale mixed-use developments and conducted numerous valuations, feasibility studies, operator searches, return on investment analyses and market studies in Europe, the Middle East, Africa and Asia. Hala has a strong understanding of the dynamics and success factors that govern profitable mixed-use projects and she maintains excellent contacts with key private and institutional investors, developers, financiers, owners and operators, having a good understanding of their investment requirements.

Hitesh Gandhi is an Assistant Consultant and Valuation Analyst with HVS Dubai. He has recently graduated from the Emirates Academy of Hospitality Management (in affiliation with École hôtelière de Lausanne) with a Bachelors

of Science degree. He started his career with Jumeirah Hotels in Dubai as a house-keeping team leader. He joined Emirates National Bank of Dubai in 2008 where he provided system solutions research for the IT department. Hitesh joined HVS Dubai in September, 2010.

HVS Dubai | Liberty House Building, DIFC, 7th Floor, Offi ce 715, Dubai, UAE

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Middle East 2011 - Hospitality Net · 2011-05-23 · Overall, investment in budget and four-star hotels is gaining momentum across most cities in the Middle East. A total of 30 branded