MENA QUARTERLY REVIEW - Colliers International
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MENA QUARTERLY REVIEW Q1 | 2019
2 Q1 2019 | MENA
MENA Quarterly Review | Colliers International
CONTENTS
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
Q1 2019 | MENA
MENA Quarterly Review | Colliers International
COLLIERS QUARTERLY UPDATE
Returning international visitation to key
Jordanian markets
2019 looks to be a watershed moment for tourism in
Jordan. Petra, a key attraction in Jordan, is expected to
receive a record number of visitors in 2019.
The recent entry of carriers, such as Ryanair, easyJet
and Norwegian Air, to both Queen Alia International
Airport (Amman) and King Hussein International Airport
(Aqaba) are providing a boost to tourism in the Kingdom
of Jordan.
Alphabet enters the OTA metasearch market
with Google Hotels
Alphabet has released its latest product addressing the
hospitality industry with the roll out of the Google
Hotels. The platform provides multiple price points akin
to established metasearch engines such as Trivago.
From a hotelier’s perspective, this may increase the
portion of direct bookings a property receives. However,
the hotels are more exposed to location and price
shopping behavior by guests.
Reflagged and Under Renovation
As the MENA hotel supply matures, the market has
witnessed an increased rate of reflagging and
renovation of properties.
Examples of this trend include both Voco Dubai and
Hyatt Regency Kuwait, which reopened in Q1 2019
after their recent rebranding. In addition, Radisson Blu
Hotel Abu Dhabi and Radisson Blu Al Ain, joined the
portfolio of the Radisson Hotel Group in Q1 2019 and
are closed for renovation.
More lifestyle brands to enter the KSA market
Lifestyle brands, such as Canopy by Hilton and Voco by
IHG, have announced their entry to the KSA market.
These brands aim to capture the growing millennial
demographic, which is expected to become the largest
source of hotel demand globally in the next decade.
Lifestyle brands offer a fresh perspective on the hotel
experience, avoiding many of the stereotypes
associated with traditional hotel concepts.
4 Q1 2019 | MENA
MENA Quarterly Review | Colliers International
KINGDOM OF SAUDI ARABIA
Dammam/Khobar experienced an improvement in occupancy of 11% in Q1 2019,
building on the 2018 performance. This trend is expected to continue throughout the
year.
The Riyadh hotel market has increased by approximately 2,100 keys between Q1
2018 and 2019, placing increased competitive pressure on rates.
Key Performance Indicators (Year-on-Year Change) Highlights
The Dammam/Khobar market has
experienced an increase in
occupancy of 11% in Q1 2019
compared to the same period last
year. This is partially due to growing
corporate demand from the oil
industry.
Approximately 2,100 keys opened
over the last year in Riyadh. The
largest contributor is the 866 key
Hotel Supply (No. of Branded Hotel Keys) Hilton Riyadh Hotel and Residences
which opened in Q1 2019.
78,500
New supply and macroeconomic
68,800
conditions in traditional source
55,500
45,200 49,700 markets have placed a consistent
downward pressure on rates in the
KSA market, which was evident in
Q1 2019.
Q1 2018 Q1 2019 FY 2019 FY 2020 FY 2021
Outlook
In Q1 2019, both Jeddah and
Source: Colliers International Madinah markets experienced a
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
contraction in demand. However, the
Year–on-Year % Change in Supply market is expected to improve in the
coming months due to initiatives by
the KSA tourism authorities
impacting domestic and international
tourism demand.
Although a number of projects have
been delayed, the quality supply in
KSA is expected to grow by 19%
between 2019 till 2021, with the
largest number of keys expected in
the Makkah market.
5
Q1 2019 | MENA
MENA Quarterly Review | Colliers International
UNITED ARAB EMIRATES
Abu Dhabi market experienced an 11% increase in ADR in 2019, an improvement
compared to the same periods in 2017 and 2018. With the anticipated opening of
Yas Bay Arena and Clymb (indoor skydiving and wall climbing centre) in 2019, Abu
Dhabi is expecting to boost its leisure and sports tourism offerings.
Key Performance Indicators (Year-on-Year Change) Highlights
Dubai witnessed the opening of two
luxury properties in the first quarter of
2019, namely the W Dubai and the
Mandarin Oriental Jumeirah Beach,
taking the total of newly opened keys
to 1,626. Sharjah (219 keys) and Abu
Dhabi (113 keys) opened one
property each during the same
period.
With the exception of Abu Dhabi,
Hotel Supply (No. of Branded Hotel Keys) which saw a 11% increase in ADR
127,000
levels, all other markets in the UAE
112,500 experienced rate compression and a
98,400 drop in occupancy in Q1 2019. AFC
91,600
81,300 Asian Cup, hosted in the UAE at the
beginning of 2019, was a catalyst for
the impressive ADR levels achieved
by the hotels in Abu Dhabi.
Q1 2018 Q1 2019 FY 2019 FY 2020 FY 2021
Outlook
UAE is expected to witness the
Source: Colliers International opening of an additional 6,500 hotel
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
keys by the end of the year ahead of
Year–on-Year % Change in Supply Expo 2020.
Anticipated opening of Yas Bay
Arena (2019), Clymb (2019) and
SeaWorld (2022) in Yas Island Abu
Dhabi is likely to further increase Abu
Dhabi’s leisure and sports tourism in
the coming years. Ras Al Khaimah
continues to focus on developing
adventure and eco-tourism. The
authorities recently partnered with
Mantis Group to open a luxury camp
project at Jebel Jais.
6 Q1 2019 | MENA
MENA Quarterly Review | Colliers International
EGYPT
Alexandria is the stand out market in Q1 2019, with a 10% growth in occupancy and
27% growth in ADR.
Positive performance in the Egyptian market has resulted in renewed investor
confidence, evidenced by the announcement of new hotel projects, such as
Steigenberger and Rixos.
Key Performance Indicators (Year-on-Year Change) Highlights
The coastal cities have started the
year with strong performance,
experiencing double digit
improvements in occupancy and ADR
over the previous year.
The Egyptian hotel market continues
to improve with the return of key
international markets and a growing
regional demand from MENA
markets.
Hotel Supply (No. of Branded Hotel Keys)
The positive performance exhibited in
key Egyptian markets has resulted in
81,500 83,600 86,100
79,500 80,800
improved investor confidence. Brands
such as Rixos and Steigenberger are
expected to operate multiple
properties in resort locations along
the Red Sea.
Q1 2018 Q1 2019 FY 2019 FY 2020 FY 2021
Outlook
Cairo Alexandria Sharm El Sheikh Hurghada The 2019 Africa Cup of Nations
Source: Colliers International returns to Egypt, and is expected to
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
attract an estimated 50,000 tourists in
Year–on-Year % Change in Supply June and July. Combined with a
returning international market, 2019
is expected to be another year of
positive hotel performance.
The North Coast has increased
domestic tourism demand over the
last 4 years, and is expected to
improve its occupancy by 5% and
ADR by 17% in 2019.7
KUWAIT CITY, MANAMA, MUSCAT,
Q1 2019 | MENA
MENA Quarterly Review | Colliers International
AMMAN
In the period between Q1 2018 and Q1 2019, over 800 keys entered into the
respective markets. This resulted in a 4% year-on-year increase in supply. Of note,
in Q1 2019, the confirmed openings were the Hilton Garden Inn in Muscat (232
keys) and Hyatt Regency in Kuwait City (200 keys).
Key Performance Indicators (Year-on-Year Change) Highlights
As of Q1 2019, all of the respective
markets, with exception of Manama,
registered a decline in year-on-year
RevPAR. Manama’s positive growth
was largely attributed to increased
demand especially in the month of
March when it played host to the
Formula 1 Grand Prix.
In contrast, the Kuwait City market’s
high rate of RevPAR decline was a
Hotel Supply (No. of Branded Hotel Keys) result of a correction to a strong
performance in months of January
34,600
31,700 and February 2018 when it played
27,400 host to various major events and
22,900 23,700 festivals that boosted performance
levels.
Q1 2018 Q1 2019 FY 2019 FY 2020 FY 2021
Outlook
Kuwait City Manama Muscat Amman An additional 3,739 keys are
Source: Colliers International expected to enter the combined
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
markets by end of 2019. This growth
Year–on-Year % Change in Supply in supply is largely contingent on the
extent of delays that have often
occurred historically.
By the end of 2021, supply is
expected to reach a total of
approximately 34,600 keys with
Muscat commanding the largest
share of supply with 11,900 keys.
All of the respective markets are
expected to remain relatively stable
in terms of RevPAR by FY 2019
Source: Colliers International compared to the 2018 performance.FOR MORE INFORMATION Christopher Lund Saqib Jafri Head of Hotels | MENA Region Senior Consultant | 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 About Colliers International Colliers International is a global leader in commercial real estate services, with over 17,000 professionals operating in 68 countries. Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognised commercial real estate firm in the world. In MENA, Colliers International has provided leading advisory services through its regional offices since 1996.
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