According to the HotelBenchmark Survey most countries within the Middle East managed to improve revPAR during 2002 with four markets reporting double-digit growth. Of the 28 markets monitored on the survey nearly 60% managed to improve revPAR during these difficult times. Kuwait and Beirut were the regions star performers reporting increases in revPAR of over 19%. Bahrain and Riyadh also reported double-digit revPAR growth of 10%. The increase in revPAR was generally driven by a growth in occupancy rather than an improvement in average rate. 

Hotels on Jumeirah Beach Dubai enjoyed the highest revPAR in the region for a fourth year in succession at US$121, up 8.5%. Occupancy levels have recovered to 2000 levels although the average rate is still under pressure with rates an average of US$7 lower than those achieved in 2000. The absence of any new additions to supply during 2002 helped support the 7.9% recovery in occupancy levels. Encouragingly, the five-star sector on Jumeirah Beach has consistently increased its performance in terms of revPAR, despite the addition of nearly 1,100 five-star rooms in the last five years. Hotels in the city centre also experienced strong demand growth during 2002 with occupancy increasing 8.7%. This performance was all the more encouraging given the addition of the 393-room Fairmont hotel to the market.

Hotels in Egypt came under significant pressure during 2002 with revPAR falling 13.6% in US dollar terms. Unlike many other Middle Eastern countries the Egyptian Pound is not linked to the US dollar and so exchange rate differentials hampered performance, as in local currency Egyptian hotels managed to curtail the decline in revPAR to just 0.6%. The performance in Egypt has not recovered since the events of September 11. Although the occupancies in most markets have been stable, the average rate in US dollar terms has declined as many hotels contracted competitive rates with the European tour operators anticipating reduced visitations in the aftermath of the attacks on the World Trade Centre. Luxor reported a 21.3% decline in the average rate for 2002 whilst the decline in Cairo was 20.6% and in Hurghada 15.1%. Although hotels in Sharm el-Sheikh experienced a fall in average room rate of 14.5%, this was offset by a 22.4% improvement in occupancy, so leaving the city with positive revPAR growth for the year.

Commenting on the results, Julia Felton, director of travel, tourism and leisure at Deloitte & Touche said, "Given the tough trading conditions during 2002 - with the three major global economies spluttering and the consequences of the US corporate accounting scandals, the industry had much to focus on in the early part of the year. Despite an overall 10.6% increase in international tourism arrivals to the region during 2002, the industry had to adapt to changing demand patterns as corporate demand dwindled and was replaced by lower-rated leisure demand. This put average room rates under pressure as hoteliers sought to adjust to this shift in business mix. The first three months of 2003 have also been tough with revPAR falling 22.9% in March as many travellers opted to defer travel plans until a resolution in Iraq was evident. We are however, hopeful for the longer-term prospects in the region as many governments seek to diversify their primarily oil-based economies by developing their tourism products. This in turn should increase the profitability of hotels in the region, provided that supply growth does not exceed the expected increase in demand.

Copies of the HotelBenchmark Survey Annual Review � Middle East 2003 are priced at £250 per copy and are available by e-mailing us at [email protected] or telephoning us on +44 20 7007 3974. 

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels. The HotelBenchmark Survey � Middle East & Africa collects occupancy and average room rate data from over 400 hotels representing nearly 90,000 rooms every month, making it largest independently run hotel performance survey in the region. For further information or details on how to join the survey please visit us www.HotelBenchmark.com or contact Lorna Clarke on +44 207 438 2870.

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Authorised by the Financial Services Authority in respect of regulated activities. The information contained in this article is correct at the time of going to press. For further information on Deloitte & Touche UK, you can access our website on www.deloitte.co.uk.