Egypt’s resort towns of Sharm El-Sheikh and Hurghada continue their recovery as both posted growth in occupancy by 34% and 39%, respectively, year over year (y-o-y) in the second quarter (Q2) of 2018, according to Colliers’ quarterly MENA review report. The witnessed increase was driven by increased security measures, tourism campaigns, and increased consumer confidence.
In terms of hotel supply, Saudi Arabia’s hotel inventory grew by 9%, the equivalent of 3,800 rooms, in Q2 2018, and the highest growth was witnessed in Dammam and Khobar with a 15% increase in supply.
Meanwhile, in Egypt’s case, a 2.1% increase was witnessed, or 1,700 rooms, keeping in mind that the InterContinental Hotels Group are continuing their plans to increase their portfolio, with the signing Holiday Inn, and Satybridge Suites Giza Sun Capital. On the other hand, the UAE’s hotel supply grew by 2,450 rooms, or 3%, mainly the new opening in Abu Dhabi and Dubai.
Moreover, in terms of the average daily rates (ADR), Sharm El-Sheikh and Hurghada both witnessed a boom of 20% and 26%, respectively, followed by Saudi Arabia’s Jeddah with a10% increase in ADR, Kuwait’s Manama with a 10% increase, and the UAE’s Fujairah, which grew by 5%.
On the other hand, Makkah’s ADR shrunk by 12%, while in the UAE, both Dubai and Abu Dhabi witnessed a 6% decrease in ADR, as both cities dropped tourism related fees for hotels in order to increase competitiveness.
Colliers forecasted that Saudi Arabia’s outlook forecast is to witness strong growth in occupancy, with domestic tourism as the key driver of such growth, supported by investments in entertainment industries, with the opening of the first multiplex cinema and the screening of the first film after 30 years in April.
In Egypt’s case, recoveries in occupancy and the ADR are expected to continue, with the strengthening of the domestic tourism market and the return of key source markets, while in the UAE, Abu Dhabi is expected to lead the growth in occupancy, while other cities such as Sharjah, Fujairah, and Ras Al-Khaimah expect growth in the ADR.