More room: Saudi Arabia, UAE lead in hotel pipeline

Over 50,000 hotel rooms under construction in 154 properties.

By Issac John (associate Business Editor)

Published: Thu 18 Jun 2015, 12:11 AM

Last updated: Wed 8 Jul 2015, 3:18 PM

Dubai: The UAE and Saudi Arabia lead the hospitality industry in the Middle East region with a combined pipeline of more than 50,000 hotel rooms under construction, latest data released by STR Global shows.

Saudi Arabia reported the most rooms under construction with 28,050 rooms in 64 hotels. The UAE followed with 22,724 rooms in 90 hotels. Qatar (6,383 rooms in 26 hotels) was the only other country in the region to report more than 5,000 rooms under construction.

There are 653 hotels totalling 159,945 rooms under contract in the Middle East and Africa region, according to the May 2015 STR Global Construction Pipeline Report.

This represents a 16.1 per cent increase in rooms under contract compared with May 2014 and a 40.4 per cent year-over-year increase in rooms under construction.

The “under contract” data includes projects in the in construction, final planning and planning stages but does not include projects in the unconfirmed stage.

The region reported 91,510 rooms in 351 hotels under construction for the month.

PwC’s second Middle East hotel forecast warns that with so much new supply coming on stream across the region, the question is whether this upswing is sustainable in the future. “With over 54,000 rooms under construction and another 72,000 planned for the region, supply could well start to outstrip demand, putting ever greater pressure on both occupancy and ADR [average daily rate],” PwC said in a recent report.

According to the latest figures issued by Dubai’s Department of Tourism and Commerce Marketing, Dubai’s hospitality industry is poised to enter a new growth trajectory with rooms predicted to surge to 140,000-160,000 keys by 2020 from 93,030 as of January 2015.

In 2014 alone, of the 44 new hotels and hotel apartments (comprising 27 hotels and 17 hotel apartments), 13 hotels came from the four-star sector and nine of the new apartments fell into the standard classification. The boom is mid-market hotels was spurred by Dubai government’s incentives including 10 per cent fee waiver.

In 2014, Dubai’s hotel portfolio grew from 611 hotels and hotel apartments to 659 — a 7.8 per cent growth over the course of the year.

In May, hotels in the UAE recorded an increase in supply by 5.6 per cent and an eight per cent growth in demand.

Occupancy has also been positive, showing a 2.3 per cent increase to 80 per cent.

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