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17pc Drop Seen in New Mideast Hotel Projects

Lodging Econometrics, a Portsmouth-based hotel real estate research company, said the total number of hotel projects in the pipeline in the Europe, Middle East and Africa region continued its decline in third quarter 2009, down to 1,396 projects and 305,170 rooms. Project counts have fallen 21 per cent from the second quarter 2008 peak, and room counts by 18 per cent.

However, the decline in projects and rooms in the Middle East was not as steep. The total hotel projects in the pipeline fell 17 per cent to 460 and the number of rooms planned declined 15 per cent to 140,061.

The decade-long surge in Middle East pipeline totals peaked in Q2 2008 and has declined in each of five quarters since, the report said.
 “The impact of the global recession was late in coming to the Middle East, but now demand is off strongly and room rates have plummeted. This, combined with growing concerns over slowing economies and financing in the region, has dampened developer sentiment considerably over recent quarters,” the report said.
 In the third quarter, new hotel project announcements in the region included only 27 projects or 8,553 rooms — a low pace that is expected to continue well into the next decade, the report said.

At 24 projects and 9,581 rooms, cancellations or postponements remain high in the Middle East, and may increase again in light of current crisis. Meanwhile, new openings will continue to accelerate through 2011 and further draw down total hotel projects in the pipeline, the report said.

Lodging Econometrics forecast for new hotel openings calls for 77 new hotels and 19,277 rooms in 2009. “New openings will then ramp up substantially with 98 hotels and 29,226 rooms in 2010, 115 hotels and 33,765 rooms in 2011, and then begin to recede thereafter.”

Dubai has been the star performer in the Middle East. “On 25 November, the emirate announced that it is seeking an extension on $60 billion in debt held by Dubai World. This situation has been a growing concern for some time, with some resolution expected soon. Dubai currently has 105 projects and 41,233 rooms underway, with 65 per cent of the projects classed as ‘under construction’.”
 Lodging Econometrics’ latest study follows a report last month that said Dubai hotels posted the largest drop in room revenues in the Middle East region in October, compared to the same month in 2008.
The emirate posted the largest average daily rate, or ADR, decrease, falling 29.3 percent to $264.73, while revenue per available room, or revPAR, fell more than 35 per cent to $198.22, according to latest research by STR Global.
 In the ADR category, Muscat was the next worst performer with a 12.8 per cent decrease to $269.79 while the Oman capital city also fared badly with revPAR decreases of nearly 28 percent to $178.39.

issacjohn@khaleejtimes.com