Middle East Hotel Project Count Hits All-Time High

The Central Bank of the United Arab Emirates this week revised the nation’s gross domestic product (GDP) growth for 2022 from 6.5 percent to to 7.6 percent. Explaining the reason for the renewed forecast, the bank cited stronger than anticipated performance of non-oil sectors, including tourism, hospitality, real estate, transportation and manufacturing. In its review report for the third quarter, the Central Bank noted that it expects non-oil gross domestic product to grow by 6.1 percent in 2022, compared to its previous estimate of 4.3 percent, while it expected oil gross domestic product to grow by 11 percent in 2022. Explaining the reasons for the steady growth in gross domestic product, the report cited the removal of most Covid-related restrictions, in addition to recovery of the tourism sector, real estate and construction boom, expansion of manufacturing activities, as well as the hosting of global events.

Qatar will allow visitors without football World Cup tickets to enter the country from December 2 after the group stage matches end.

The United Arab Emirates government on Sunday announced the lifting of all precautionary measures implemented in the country during Covid-19. With the lifting of restrictions, wearing of masks has now been made optional in all open and closed facilities, including places of worship and mosques. However, those categorized as “people of determination” would be required to wear mask while visiting health facilities and centers. The Al Hosn app would now only be required to furnish proof of vaccination and for test results inside and outside the country, when required. The green pass on the app would no longer be required to enter public facilities and sites. The requirement of a polymerase chain reaction test would also no longer be made mandatory for those attending or participating at sporting events. The authorities said they have decided to ease the restrictions after studying the epidemiological situation in the country and having monitored occupancy rates in hospitals and intensive care for Covid cases.

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The Middle East is leading international travel recovery in the fourth quarter as inbound arrivals to the region witnessed an increase of 4 percent, long ahead of the global average of a decrease of 30 percent, according to travel analytics firm ForwardKeys. “The FIFA World Cup is certainly the key driver for its travel recovery,” said Juan Gomez, head of market intelligence at ForwardKeys. The latest air ticketing data by ForwardKeys also shows that international arrival levels may be back to normal in 2023, with travel to the Middle East up by 15 percent on pre-pandemic levels in the first quarter. Overall, the outlook for 2023 looks promising, despite high inflation in key source markets and the looming recession, FowardKeys noted. The Middle East is also attracting more premium travellers than in 2019, the travel analytics firm noted with Saudi Arabia showing the greatest growth. Qatar, Egypt, Jordan, and Lebanon are also showing growth, with a regional average of 11  percent above 2019.

The Gulf region now has more than 170,000 hotel rooms under active development, which includes planning, final planning and under construction, according to research conducted at the end of September by STR, a hotel market intelligence and global benchmarking company. This active hotel development pipeline now equals 40 percent of the Gulf region’s existing hotel room inventory, a figure almost four times greater than the global average of 11 percent. The STR report estimates 135,560 existing rooms in Saudi Arabia with an active pipeline of 82,639 rooms, with total room inventory projected for 2030, at over 218,000 rooms. Similarly for the United Arab Emirates, the research currently tracks more than 202,000 existing rooms with an active pipeline of 48,910 rooms, a combined total of almost 251,000 rooms by 2030. “Interestingly, Ras Al Khaimah, is second only to Dubai, with 5,076 rooms in its pipeline, almost the same amount as Sharjah, Abu Dhabi and Fujairah combined,” said Danielle Curtis, exhibition director of Arabian Travel Market. The research had been commissioned by Arabian Travel Market.

Indian carrier Vistara reported its first-ever net profit for the quarter ending December 2022, according to statement from the airline on Monday.  

Having witnessed a stronger than expected recovery in 2022, the Middle East could see international tourist arrivals return to pre-pandemic levels this year, according to the United Nations World Tourism Organization (UNWTO). Data from the UNWTO World Tourism Barometer noted that while all regions enjoyed significant increase in international arrivals in 2022 over the previous year, the Middle East recorded the strongest relative increase as international tourist numbers climbed to 83 percent of pre-pandemic numbers last year. “The region welcomed large events such as Expo 2020 Dubai and the FIFA World Cup in Qatar, as well as a highly attended Hajj pilgrimage in Saudi Arabia,” noted UNWTO in its report.  “UNWTO anticipates a strong year for the sector even in the face of diverse challenges including the economic situation and continued geopolitical uncertainty,” Secretary General Zurab Pololikashvili said. UNWTO noted that over 900 million tourists travelled internationally in 2022, which was double the number of those who travelled in 2021 though still 37 percent below 2019.

Dubai received 14.36 million international overnight visitors in 2022, growing 97 percent year-on-year from the 7.28 million tourist arrivals in 2021, according to the latest data published by Dubai’s Department of Economy and Tourism. In 2019, the city had welcomed a record 16.73 million international overnight visitors. The strong performance in 2022 features some noteworthy spikes in Dubai’s traditional key markets and strong growth across emerging markets. Dubai remained a first-choice safe travel destination for visitors from the city’s stronghold markets. Western Europe and Gulf regions each accounted for a 21 percent share of arrivals. The Gulf region in particular saw an exponential increase in their share of arrivals from 13 percent in 2021 to 21 percent last year. South Asia contributed 17 percent of total volumes while the Middle East and North Africa region contributed 12 percent, further reinforcing Dubai’s continued appeal to travelers from proximity markets. The Americas accounted for seven percent of arrivals while North Asia, Southeast Asia and Africa each contributed five percent and Australasia accounted for two percent.

Hotel development in the Middle East is ramping up as investors begin to see opportunity in the region again, according to Lodging Econometrics’ Middle East Construction Pipeline Trend Report. The report said new project announcements in the region continued to trend upward throughout 2022 closing the fourth quarter of 2022 with 67 new projects housing 19,837 rooms, an increase of 56 percent year-on-year. The fourth quarter also witnessed 33 new hotels accounting for 6,452 rooms open in the region. Overall, 2022 saw a record number of hotels openings with 81 hotels accounting for 17,736 rooms. Lodging Econometrics’ forecast for new hotel openings in 2023 is 123 new hotels with 30,113 rooms while 116 new hotels and 29,085 rooms are forecast to open in 2024. Countries in the Middle East with the greatest number of projects in the construction pipeline at the close of fourth quarter were Saudi Arabia with 243 projects and 67,618 rooms, followed by the United Arab Emirates with 104 projects and 29,210 rooms. Egypt came third with record high project and room counts of 87 projects and 21,672 rooms.

Despite a sluggish international travel market, the pace of recovery in the Middle East aviation market accelerated throughout 2022 and is expected to take off over the next 10 years with the region’s share of the global fleet set to expand. In its “Global Fleet and MRO Market Forecast 2023-2033,” global management consulting firm Oliver Wyman noted that the Middle East remains among the fastest-growing aviation markets in the world, with the regional fleet set to expand 5.1 percent annually over the next decade. The report further noted that the Middle East’s share of global fleet will grow over the decade from 4.9 percent in 2023 to 6 percent in 2033.  Meanwhile, the global fleet is projected to expand one-third by 2033, to well over 36,000 aircraft, with Oliver Wyman also anticipating a record number of aircraft deliveries over the next 10 years (despite current supply chain constraints). The Middle East fleet’s growth over the next decade will primarily be driven by the addition of narrow bodies. Historically, the Middle Eastern fleet has been primarily made up of widebodies. But moving forward, the report observed that narrow bodies will increase to 48 percent of the fleet from 39 percent, while wide bodies will decline to 48 percent from 56 percent.

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