The GCC’s hospitality sector suffered a slump in activity during May, a new report has shown.
UAE numbers are on the decline, yet Saudi’s sector is in a better position thanks to a certain religious practice.
Cause for worry?
According to the MENA hotel benchmark report by global consultancy Ernst & Young (EY), “the majority of the internationally branded four and five-star hotels in the Middle East hospitality market witnessed a decline across occupancy, average room rate (ADR) and RevPAR in May 2018 when compared to May 2017.”
The report justifies this drop by highlighting that Ramadan beginning in mid-May this year and the onset of the summer season both led to this, and they find the overall decline in performance in the region unsurprising.
Saudi Arabia, however, benefitted from the large influx of pilgrims during the holy month. Over two million pilgrims were expected to have visited the holy city, resulting in increased KPIs across Makkah, Madinah, and Jeddah, with declines only in Riyadh.
As for the rest of summer, they expect that “the MENA hospitality market will continue to see a drop in KPIs during the summer season as business travel declines and conferences and events are at a minimum.”
Saudi numbers on the upturn
In terms of KPIs, Abu Dhabi maintained the highest occupancy for the month of May with a 76.6% occupancy rate.
Saudi Arabia was the top performer across the other metrics with Jeddah recording the highest ADR of $351, resulting in the highest RevPAR of $259 in May 2018.
Makkah saw an increase in occupancy by 7.3% points to 61.2% in May 2018 from 53.9% in May 2017. The city’s ADR increased by 41.3% from $165 to $233, which resulted in a growth in RevPAR by 60.4% from US$89 in May 2017 to $143 in May 2018, both of which were the record highest increases across the region for the same period.
Madinah’s occupancy increased by 4.2% points from 63.8% in May 2017 to 68% in May 2018. It’s ADR increased by 11% from $178 to $198, resulting in an increase in RevPAR by 18.3% from $114 in May 2017 to $135 in May 2018.
Jeddah saw an increase in occupancy by 2.2% points to 73.7% in May 2018 from 71.5% in May 2017. The city also enjoyed a significant growth in ADR by 19.5%, up from $294 in May 2017 to $351 in May 2018. This led to an increase in RevPAR by 23.2%, up from $210 in May of last year to $259 in May of this year.