Stat: Hotel Rooms Up 7.6 Percent in the Middle East

STR Global has released its Global Construction Pipeline Report for March, and the EMEA numbers are intriguing: While Europe has more hotels under contract, the Middle East has decidedly more rooms poised to open in the coming year.


Middle East

As of March, 626 hotels with 147,680 rooms are Under Contract in the Middle East/Africa region, representing a 7.6-percent year-over-year increase in rooms under contract compared with March 2014 and a 22.6-percent increase in rooms under construction. 

Among the region’s key markets, Dubai reported the largest number of rooms under construction with 14,385 rooms in 49 hotels. This could well be attributed to the Emirate's goal of attracting 20 million visitors in advance of the Expo 2020, which is expected to attract around 17.5 million overseas visitors during the six-month run of the show. As reported last week, tourism is expected to increase between 7 and 9 percent over the next five years and account for almost 30 per cent of Dubai’s GDP. 

But the influx of rooms may not be entirely positive: Hotel occupancy rates and revenues in the Emirate have dropped over the past year due to increasing supply. RevPAR dropped by -7.7 percent year on year in February, representing the ninth consecutive month of contraction.

Beyond Dubai, three other markets in the MEA region reported more than 5,000 rooms under construction: Doha, Qatar (6,612 rooms in 24 hotels); Makkah, Saudi Arabia (5,936 rooms in 10 hotels, including seven from Hyatt); and Riyadh, Saudi Arabia (5,477 rooms in 21 hotels).

The region reported 77,924 rooms in 315 hotels under construction for the month.


Europe, meanwhile, has 868 hotels with 139,057 rooms under contract, representing a 7.2-percent year-over-year decrease in rooms under contract compared with March 2014 and a 4.1-percent decrease in rooms under construction. 

The United Kingdom has the most rooms under construction with 11,542 rooms in 80 hotels. There's good reason for the growth: As of last month, occupancy rates in London alone were predicted to hit a 20-year high of 84 percent this year, with average nightly rates rising to £144. This is three years after the glut of pre-Olympic hotel openings, but visitor numbers do not seem to be declining. 

Beyond London, hotels in provincial England saw an 11.7 percent year-on-year increase in profit per room in 2014, HotStats reported this week, outpacing the TRevPAR growth of 6.3 percent. And brands are paying attention: Last week, InterContinental Hotels Group signed the Hotel Indigo Bath, which will be rebranded from two existing hotels and is expected to open toward the end of 2016. In Wales, meanwhile, growth from ARR and F&B revenues contributed to a third year of positive headline performance for the region, resulting in a GOPPAR surge of 14.5 percent in 2014.

Three other countries reported more than 5,000 rooms under construction: Russia (9,735 rooms in 51 hotels); Turkey (8,970 rooms in 52 hotels, many of which are supported by government land grants); and Germany (6,183 rooms in 37 hotels).

The region reported 59,194 rooms in 364 hotels under construction for the month.