Middle East hotel industry can ride out current storm

Robert O'Hanlon, Tourism, Hospitality and Leisure Partner at Deloitte Middle East, who is leading a seminar at Arabian Travel Market 2009, believes the challenges of global economic fall-out and dollar-pegged destinations becoming more expensive for UK and European travellers - the region's traditional source markets - can be mitigated by new and existing hotel brands providing value for money, whatever their target demographic.

O'Hanlon predicts that growth in budget and premium hotel options will ensure the Middle East navigates the global tourism downturn, which saw regional revenue per available room rates (RevPAR) drop by more than 10% from November 2008 to January 2009.

"Gulf countries have signalled they are willing to invest in long-term, sustainable tourism developments which appeal to a global audience. The hotel industry is viewed by these players as the decisive driver in the development of their business and tourism sectors,"

said O'Hanlon, who will give the keynote speech at the 'The Middle East Hotel Performance Review' - one of 18 seminars at Arabian Travel Market 2009, the region's premier travel and tourism event, taking place 5-8th May in Dubai, UAE.

"The region's underlying wealth and the appreciation of quality ensure there will always be a call for premium accommodation; while mid-market and budget operators are well placed to gain ground over competitors if current economic conditions persist beyond 2009.

"I fully expect the Dubai-led trend in facilitating for quality mid-market and budget accommodation to expand to other regional centres," he added.

Although most regions were reporting double-digit growth in hotel performance in the first six months of last year, the credit crunch bite and deepening recession eventually saw significant declines in RevPAR growth, with North America down 1.6% and Europe and Asia Pacific registering growth of less than 2% for 2008.

However, the Middle East - buoyed by an 11.3% increase in visitors (up to 52.9m for the calendar year) - turned-in strong overall RevPAR growth of 18.3% to average out at $148, placing it ahead of Europe for the first time.

"In 2008, Asia Pacific showed an overall occupancy rate of 65.5%, Europe 65.7%, the Middle East 68.8%, and the USA 60.4%. All these regions, apart from Middle East, which was up 1.2%, experienced occupancy declines," said O'Hanlon.

"In the Middle East, occupancy rates were 70.9, 72.6, 68.8, and 60.8% in October 2008 through to January 2009 respectively. Whilst these remain high by global standards, they reflect a drop compared to the prior year. This decline mirrors both the lower global demand and the increased supply during 2008."

O'Hanlon also issued a stark ultimatum to the region's hospitality industry, stating if it was to weather the current storm, it needed to remain committed to providing quality value and services.

"Apart from utilising the opportunities created by a recessionary environment, hotels must continue implementing steps that create value in the long run. They must resist the pressure to slash rates and provide a lesser-quality service. The strategy for the tourism industry this year is to focus on survival; for hotels in particular this means providing value for money."

"Concentrating on what they do best, what differentiates them from others, and providing the essentials of good hospitality will help them to maintain their brand strengths as hoteliers compete to fill rooms," he said.

O'Hanlon joins an impressive speaker line-up for Arabian Travel Market 2009's expanded seminar programme. With 25 panellists covering 18 sessions - the largest number to date for the Dubai International Convention & Exhibition Centre-based show - leading industry decision makers will discuss hot topics including the global cruise industry, market potential and development of the Gulf region's cruise sector; recruitment and retention best practice in the hospitality sector; the outlook for the Gulf meetings industry and the future of Middle East air travel.

""The diverse seminar programme at Arabian Travel Market 2009 reinforces our long-term goal of providing a knowledge rich show. The discussion and debate that will take place during the four days of the event will feature industry topics fronted by leading professionals in their field," said Mark Walsh, Group Exhibitions Director, Reed Travel Exhibitions - the company behind Arabian Travel Market 2009.

"In the current economic climate, deliberation combined with a high-level platform to conduct business face-to-face are critical and will ensure that Arabian Travel Market 2009 is the most productive and knowledge savvy show to date."

The online portal for Arabian Travel Market can be found at www.arabiantravelmarket.com. Signing up early will allow visitors to take advantage of extensive e-networking tools that will allow them to link up with the most relevant industry players to their business.

Arabian Travel Market is held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai, and under the auspices of the Department of Tourism and Commerce Marketing, Government of Dubai.