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MENA Hotels Quarterly Review – Q1 2020 – Colliers International

GCC countries have suspended all international flights and tourist visas. Some of the hotels in the GCC countries have been closed temporarily, while some are acting as isolation centers during this COVID-19 period. What is the outlook like?

79% of hotel owners decided to partially or fully close their hotels due to low occupancy rates 46% of respondents expect the recovery period to begin in Q4 of 2020 A total of 7,900 quality branded hospitality keys have entered the UAE market between Q1 2019 and Q1 2020

COVID-19 PANDEMIC GCC UPDATE

Amid the Coronavirus outbreak, the GCC countries have suspended all international flights and tourist visas. Some of the hotels in the GCC countries have been closed temporarily, while some are acting as isolation centers during this period. Religious tourism in Saudi Arabia has also been temporarily suspended.

Most of the countries are currently undergoing either partial or complete lockdown in order to contain the spread of virus.

Read: MENA Hotel Forecasts April 2020- Colliers International

HOTEL INVESTORS EXPECT RECOVERY PERIOD TO BEGIN IN Q4 2020

Colliers International surveyed hotel investors in the MENA region to get their perspective on the COVID-19 pandemic. It was found that 79% of hotel owners decided to partially or fully close their hotels due to low occupancy rates.

Most hotel investors remain hopeful for a relatively quick recovery period. 46% of respondents expect the recovery period to begin in Q4 of 2020.

Read: MENA Hotel Market Sentiment: How hotels are responding to COVID-19

ABU DHABI ANNOUNCES RELIEF INITIATIVES FOR TOURISM INDUSTRY

Abu Dhabi has suspended all tourism and municipality fees for the year 2020. Along with this, the restaurants, tourism and entertainment sectors will also get a 20% rental reduction for the full year 2020.

The travel and tourism sector has been hit hardest by coronavirus, initiatives like these have been designed to support the industry during these difficult times.

Read: “Let’s Act Responsibly”: Hotel Group CEO makes a plea to help hospitality staff

A total of 7,900 quality branded hospitality keys have entered the UAE market between Q1 2019 and Q1 2020. 95% of this new supply opened in Dubai. These branded hotel openings include Crowne Plaza Dubai Marina, Radisson Red Silicon Oasis and ME Dubai Hotel. 

Outlook 

The supply in the market is expected to increase at a CAGR of 12% between 2020 and 2022. This will introduce an additional 35,200 keys in the market.

RISE IN TOURISM INTEREST IN KSA

Interest in the Kingdom of Saudi Arabia as a tourist destination picked up since the launch of the new tourism visa in September of last year.

The Saudi Commission for Tourism and National Heritage (SCTH), revealed that visitors from China, UK, Malaysia, United States and Canada topped the list of new arrivals to the Kingdom after the launch of the new tourist visa.

Al Ula tops the list of destinations amongst Chinese travelers.

The COVID-19 pandemic has had a significant impact on the hotel industry in the Kingdom of Saudi Arabia. The Saudi hotel market experienced a drop in occupancy with Makkah being the hardest hit market due to a temporary halt on religious activities, which draw millions of people to the city every year. 

Outlook

The branded hospitality market in KSA is expected to reach 62,000 keys by the end of 2020, with Makkah and Riyadh being the largest contributors to the supply. The supply is expected to grow at a CAGR of 16% from 2020 to 2022.