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MENA

FULL YEAR
REVIEW
FULL YEAR | 2018
2 Quarter 4 2018 | MENA
MENA Full Year Review | Colliers International

CONTENTS

3 Colliers Quarterly Update

4 Kingdom of Saudi Arabia


Riyadh
Jeddah
Dammam/Khobar
Makkah
Madinah

5 United Arab Emirates


Dubai
Abu Dhabi
Sharjah
Ras Al Khaimah
Fujairah

5 Egypt
Cairo
Alexandria
Sharm El Sheikh
Hurghada

7 Kuwait City, Kuwait

7 Manama, Bahrain

7 Muscat, Oman

7 Amman, Jordan
3

Quarter 4 2018 | MENA


MENA Full Year Review | Colliers International
COLLIERS QUARTERLY UPDATE
New brands launched in the MENA market in 2018 ranged from luxury to budget. The new brands help diversify
a market that has been criticized for its focus on the luxury and upscale segments in previous years.
The Sharek E-Visa, a dedicated online portal for sports-related events that successfully piloted an online visa
system for Formula E, may offer a blueprint for the expected implementation of a general tourist visa in KSA.
The Dubai International Airport reached a milestone of 1 billion passengers in December 2018, cementing its
status as a hub of international and regional transit on the global stage.

Multiple new brands enter the MENA market in Saudi E-visa launches through dedicated
2018 ‘Sharek’ portal
2018 witnessed the arrival of several new brands into While limited in scope to sporting tournaments,
the MENA region such as; Caesars Palace, Voco, Edition competitions and programs, the ‘Sharek’ portal offered
Hotels, Element Hotels by Westin, Motto by Hilton and sports enthusiasts the opportunity to attend the Formula
OYO. Positioned at different scales the new brands are E race in Riyadh. Visitors were able to obtain a the
expected to offer unique value propositions to hotel required visa without visiting an embassy. The portal
investors and guests. provided a trial run for the expected rollout of an e-visa
system for tourists in the future.

Dubai International Airport (DXB) keeps rank as Oman targets September 2019 for the
the busiest international airport implementation of VAT
DXB retained its title as the busiest airport in the world The Ministry of Finance in Oman has announced that
for international travel in 2018 for the fifth consecutive VAT rollout may begin in September 2019, however, the
year after reaching 89.1 million passengers amidst a date is currently under review. The implementation of
slowing global economy that affected growth in VAT will be the second occurring in 2019 for the GCC,
passenger movement. In December 2018, DXB with Bahrain implementing VAT in January 2019. The
witnessed the arrival of its one billionth passenger. UAE and KSA were the first GCC countries to implement
VAT in January 2018.
4 Quarter 4 2018 | MENA
MENA Full Year Review | Colliers International

KINGDOM OF SAUDI ARABIA


Jeddah maintained its growth in ADR, closing 2018 as the only market to achieve a
year-on-year improvement.
Makkah and Madinah opened the most keys in 2018, contributing a respective 43%
and 19% share to total keys opened in KSA.

Key Performance Indicators (Year-on-Year Change) Highlights

Markets across KSA underwent a


decline in ADR in 2018. Jeddah
remained the only city to see an
improvement in ADR of 10%,
although it experienced a 1% drop in
occupancy.

Madinah experienced the largest


year-on-year improvement in supply
in KSA for 2018. An additional 630
keys opened resulting in a 9.8%
Hotel Supply (No. of Branded Hotel Keys) growth in supply in 2018.

87,200 2018 is the third year of declining


74,300 ADR for the key markets in KSA.
However, increased demand appears
57,000
47,700 to have mitigated the effect for the
44,400
city of Madinah.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021


Outlook

Riyadh Jeddah Dammam/Khobar Makkah Madinah The Makkah market continues to


Source: Colliers International introduce new supply due to projects
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
such as Tilal al Naseem and Jabal
Year–on-Year % Change in Supply Omar. Approximately 7,000 keys
have been planned for the upcoming
three years.

Forthcoming hotel supply is expected


to grow annually at a rate of 24%.
This growth is due to the high portion
of delayed properties that are
expected to open in the coming
years.

Occupancy in hotels across the key


markets is expected to improve in
2019, despite a growing supply.
5

Quarter 4 2018 | MENA


MENA Full Year Review | Colliers International
UNITED ARAB EMIRATES
While Dubai has been experiencing a slowdown in visitation in 2018, key source
markets such as China, Russia and Germany have shown a double digit growth
compared to last year. Abu Dhabi, on the other hand, continues to witness growth
among all the top source markets.

Key Performance Indicators (Year-on-Year Change) Highlights

Nearly 10,400 keys opened in the


UAE in 2018, with more than 72% of
the openings in Dubai, followed by
23% in Abu Dhabi, along with the
entry of new brands such as Edition,
OYO, Element and Caesars Palace.

Most markets experienced rate


compression and a drop in
occupancy in the UAE in 2018.

YTD November 2018, Dubai


Hotel Supply (No. of Branded Hotel Keys)
recorded a 0.4% increase in overall
124,500 visitation and double digit growth for
109,350
markets such as China, Russia and
97,000
89,980 Germany. Abu Dhabi saw a 4.5%
79,600
increase in hotel guests backed by
positive growth in demand from
India, China and UK.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021


Outlook

Dubai Abu Dhabi Sharjah Ras Al Khaimah Fujairah An additional 34,500 hotel keys is
Source: Colliers International expected to enter the UAE market
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
over the next three years.
Year–on-Year % Change in Supply
Rate compression is expected to
continue in 2019 for most markets in
the UAE with increasing arrivals from
price-sensitive source markets.

RAKTDA’s New Destination


Strategy, announced in Dec 2018,
aims to attract 1.5 million visitors to
Ras Al Khaimah by 2021. The
Emirate continues to expand its
connectivity with European cities to
cater to the growing demand by
increasing direct chartered flights.
6 Quarter 4 2018 | MENA
MENA Full Year Review | Colliers International

EGYPT
FY 2018 was the second year in a row with improved performance for each market
in Egypt.
Sharm El Sheikh and Hurghada experienced over 20% improvement in demand and
occupancy in 2018, however a slower rate of growth is expected in 2019 for both
markets.

Key Performance Indicators (Year-on-Year Change) Highlights

Alexandria experienced double-digit


growth in demand in 2018, retaining
the lead in occupancy while
managing to improve ADR by 15%.

Effects of recovery are evident in


Hurghada and Sharm El Sheikh.
Hurghada has achieved performance
figures last seen in 2015, although
Sharm El Sheikh has yet to reach the
same levels of performance.
Hotel Supply (No. of Branded Hotel Keys) The last property to officially open in
2018, the Steigenberger Pure
82,300 83,900 86,400
79,500 80,800
Lifestyle Resort is a 5-star hotel
property complimenting the
Steigenberger Al Dau Resort in
Hurghada.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021


Outlook

Cairo Alexandria Sharm El Sheikh Hurghada Old projects are expected to gain
Source: Colliers International new life as the market is once more
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
able to support new developments.
Year–on-Year % Change in Supply
The Egyptian hotel market is
forecasted to expand its total key
supply by 2% annually between 2019
and 2021.

Sharm El Sheikh is expected to


obtain the highest growth in
occupancy (7%), while Hurghada and
Alexandria are both expected to see
a 9% improvement in ADR in 2019
over 2018.
7

KUWAIT CITY, MANAMA, MUSCAT,

Quarter 4 2018 | MENA


MENA Full Year Review | Colliers International
AMMAN
Approximately 1,000 keys entered all of the respective markets in 2018. This
resulted in a 4% annual increase in supply which is below the expected average
annual supply growth of 14% between 2018 and 2021.

Key Performance Indicators (Year-on-Year Change) Highlights

At the close of 2018, the Muscat


hotel market recorded the highest
annual occupancy while the Kuwait
City hotel market registered the
highest annual ADR. This trend
effectively continued an on-going
four-year trend amongst the four
hotel markets.

In terms of evolution of supply, each


of the respective markets witnessed
Hotel Supply (No. of Branded Hotel Keys) only one hotel property opening
during the course of 2018. In this
35,100
32,300 context, the largest property opening
28,700 by key count was in Muscat with the
22,700 23,700 opening of Kempinski the Wave.

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021


Outlook

Kuwait City Manama Muscat Amman An additional 11,353 keys are


Source: Colliers International expected to enter the combined
Note: Includes only branded hotel supply; takes into account potential cancellations and delays
markets by 2021.
Year–on-Year % Change in Supply
Muscat is expected to have the
highest share of the total forthcoming
supply with an expected 5,854 keys.
As a result, Muscat may overtake
Manama as the largest market by
branded hotel supply.

All of the respective markets are


expected to remain relatively stable
in terms of RevPAR in 2019 when
compared to the 2018 performance.
FOR MORE INFORMATION

Christopher Lund Saqib Jafri


Head of Hotels | MENA Region Senior Consultant | Hotels MENA Region
+971 55 899 6110 +971 55 769 9797
Christopher.lund@colliers.com saqib.jafri@colliers.com

James Wrenn
Senior Manager | Hotels MENA Region
+971 55 736 6767
James.wrenn@colliers.com

About Colliers International


Colliers International is a global leader in commercial real estate services, with over 15,400 professionals operating in 69
countries. Colliers International delivers a full range of services to real estate users, owners and investors worldwide,
including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting,
valuation, consulting and appraisal services and insightful research. The latest annual survey by the Lipsey Company
ranked Colliers International as the second-most recognised commercial real estate firm in the world.

In MENA, Colliers International has provided leading advisory services through its regional offices since 1996.

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