Checking In

After a tough year, hoteliers are hoping to see the Gulf hotel market return to form in 2017.

- Robert Anderson

In days gone by the Gulf Cooperation Council was the darling of the global hotel industry.

Record revenue per available room, some of the world’s highest occupancy rates, government investments in tourism infrastructure and mega events on the horizon attracted hoteliers from every corner of the globe keen to gain their slice of the action.

“Seven to eight years ago there was so much demand into the destination and much less supply. Hotels were used to very good occupancies, sky rocketing rates, very good profits and that was the way it was,” says Christian Pertl, regional vice president of sales operations for the Middle East and Africa at Hyatt.

“You didn’t necessarily need to think a lot about strategies, and where is the business coming from and what you needed to do. Business was there. That has obviously changed. “

First quarter data from market research firm STR serves as an indicator of this changing climate faced by regional hoteliers as the lower oil price, reduced economic sentiment and government austerity measures continue to impact the industry.

Reductions in revenue per available room (RevPAR) – a key metric of hotel performance – ranged from 30 per cent in Jeddah, to 22 per cent in Riyadh, 17 per cent in Manama, 16 per cent in Doha, 15 per cent in Muscat and 8 per cent in Abu Dhabi.

Dubai, hailed as one of the few Gulf bright spots, saw a more moderate decrease of just under 4 per cent.

“2016 was a very tough year across pretty much all markets and 2017 started in a similar fashion,” says Robin Rossmann, managing director of STR.

“Saudi has had the toughest of it, Qatar is also struggling to cope with all the increased supply that’s going in there, and likewise Bahrain which is heavily dependent on outward bound Saudi demand has had a tough time.”

Are things as bad as they seem?