Middle Eastern Airlines Spearhead Aviation Recovery with Traffic Surge

In the second quarter of 2023, the Middle East’s hotel construction pipeline has seen significant growth, marking its highest project count since the first quarter of 2020, according to Lodging Econometric’s Middle East Hotel Construction Pipeline Trend Report.

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.

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.

Malaysia’s Capital A will not be merging its airlines, but will instead move all the carriers under one existing structure, similar to how British Airways, Iberia Airline, and Aer Lingus operate under the International Airlines Group umbrella, said CEO Tony Fernandes on Monday.

Good morning from Skift. It’s Tuesday, January 10, and here’s what you need to know about the business of travel today.

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 airline industry plans to invoke EU rights to freedom of movement to push back against environmental restrictions on short-haul flights, officials in the sector said, following a partial ban in France approved by Brussels in December.

While EaseMyTrip’s core business is scheduled air travel, the Indian online travel agency now wants to grow its non-scheduled air travel business and further democratize it.

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.

The post-Covid recovery of the real estate sector in Saudi Arabia is led by increasing tourist demand and government spending on infrastructure projects such as the investment in King Salman International Airport, Deloitte noted in its latest real estate report. In 2022, both average daily rate (ADR) and occupancy improved from 2021 as market-wide recovery was supported by the ease of travel and faster visa processing for tourists, according to the report. The first three months of the year were the strongest for occupancy performance in Riyadh, reaching 76 percent in March. Meanwhile, Jeddah hotels recorded the highest occupancy performance in May at 59 percent. The facilitation of a tourist visa for Gulf residents and the visa on arrival extension to UK, U.S. and European Union residents aims to support the country’s ambition to welcome 100 million visitors a year by 2030, the global consultancy firm noted in its report.

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.