Date: November 2017
Location: The Middle East
The hospitality industry — particularly that of Saudi Arabia and the UAE — is booming, with 583 hotel projects under contract as of August, according to data from STR’s latest Pipeline Report. According to the figures, the UAE and Saudi Arabia remain the region’s most active hotel construction hotspots.
The Kingdom has 40,020 rooms in 89 projects in the construction pipeline, while the UAE has 35,050 in 121 projects.
With the UAE enhancing its role as a global leisure, tourism, and entertainment hub, the country is set to welcome 25 million visitors for Expo 2020 Dubai, and draw US $44 billion in international tourism receipts by 2020, or 51% growth from 2016, according to a study by BMI Research.
Due to mega-projects, such as the UAE’s Bluewaters Island, Expo 2020 Dubai, and the Warner Brothers theme park, the Middle East and North Africa’s $4 trillion construction market is the world’s fastest-growing, according to reports by BMI Research and PwC.
So it comes as no surprise that owners wish to invest. Dubai recorded the highest RevPAR performance at $209 within the MENA region, according to The EY Middle East Hotel Benchmark Survey report. The emirate has continued to focus on increasing tourism by means of meetings, incentives, conferences and exhibitions events, leisure attractions, exhibitions and conferences, a diverse hospitality supply, and revised visa policies, which have all contributed to its current performance.
Hotel brands, ranging from the Marriot conglomerate and Kempinski to Rezidor’s Raddison Blu, and the Address Hotel and Resorts, have all announced massive pipelines for both Saudi Arabia and the UAE.
Emaar Hospitality Group, for example, revealed plans to build the 12th Dubai Address hotel project. With its two other hospitality brands, Vida Hotels and Resorts and Rove Hotels, Emaar Hospitality Group now has 11 operational hotels and 28 hotel projects in the pipeline, in Dubai and markets like Saudi Arabia, Bahrain, Egypt, and Turkey.
Additionally, international brands such as Paramount Hotels in partnership with Damac and Bellagio are set to make a much anticipated debut in the UAE. Paramount Pictures, one of the oldest film production companies in the world, has stepped into the hospitality industry under the brand name ‘Paramount Hotels & Resorts’. Located in Downtown Dubai, the $1.35bn hotel and serviced residences project is being developed by Damac in partnership with Paramount Hotels and Resorts.
A beachfront development in Dubai, featuring an MGM Hotel, MGM Residences, and a Bellagio Hotel, will mark the debut of the iconic MGM and Bellagio brand names in the Middle East.
So it looks like the next few years will be particularly busy. A majority of the new hotels entering the market will open before 2020, according to the Middle East Hotel Construction Overview report prepared by Tophotelprojects, which also found that 2017 promises to be the busiest year leading up to 2020, with 189 projects and 58,527 rooms forecast.
A recent Hotelier Middle East poll conducted at the AHIC Advisory Board found that mega-developments, such as Saudi Arabia’s Red Sea Project, or UAE’s Jewel of the Creek, are attractive investment options for hospitality.
Spurred on by targets set out in Saudi Vision 2030 and related diversification efforts, developers in the Kingdom have joined the development spree, exploding onto the scene with a plethora of high-profile hospitality projects during the past year. Saudi has the most hotel rooms under construction in the MENA region, according to analysts STR.
Most of development, however, is contained to the two cities of Makkah and Madinah. Among the dozens of new hotels being built there, Abraj Kudai is expected to be the largest, with 10,000 rooms, when it opens later this year.
But it’s not just investors, it’s also operators who are keen to be in these countries. According to the data collected through the annual Hotelier Middle East GM Survey [see pgs 40-45], the UAE and Saudi Arabia were deemed hotspots by the general managers in terms of attraction of operating a property there. The GMs who answered our survey said Saudi Arabia, and specifically Makkah, is where they’d like to be.
Marriott International, the world’s largest hotel operator, has more than 10,000 rooms in 30 hotels in its Saudi pipeline. Alex Kyriakidis, president and managing director, Middle East & Africa, Marriott International, said that the massive redevelopment of the holy cities was attractive to hoteliers and investors.