The nation's hospitality investment forecast reveals that there are hotel and residential projects with a combined worth of $301.7 billion currently in the development phase, according to Knight Frank.
Hotel operators in the UAE are anticipating a robust performance in the fourth quarter, with key events such as the COP28 climate summit and New Year's Eve festivities expected to bolster bookings during the country's traditionally busy winter season.
Key Expectations:
- Strong Occupancy Rates: UAE hotels are gearing up for the fourth quarter with expected occupancy rates ranging from 80% to 90%. The combination of business conferences, leisure events, and favorable weather is set to attract international travelers.
- IHG Forecasts: InterContinental Hotels Group (IHG), renowned for managing Crowne Plaza and Holiday Inn brands, is making substantial revenue forecasts. IHG anticipates a 20% increase in revenue per available room (RevPAR) for its UAE hotels in the fourth quarter compared to the same period in 2019. The company also expects a 10% RevPAR growth compared to the fourth quarter of 2022, with COP28 being a driving factor.
- Peak Demand in Q4: Traditionally, the final quarter of the year experiences peak demand due to business meetings, holiday travel, and tourism. The European and Indian markets are particularly prominent during this period.
- Marriott and Hilton: As per Sandeep Walia, chief operating officer for Marriott International, is seeing an optimistic outlook for the fourth quarter, attributed to global business events like the Dubai Airshow and COP28 in November. They have begun receiving numerous inquiries and bookings, and the fourth quarter is usually one of the busiest for Marriott in the UAE. Hilton is also optimistic about the fourth quarter, with the trend of average daily rate (ADR) growth outpacing the rise in occupancy levels expected to continue.
- Solid UAE Quarter: Siegfried Nierhaus, Vice President for the Middle East at Deutsche Hospitality, indicates that the company's UAE hotels expect occupancy rates between 85% and 90% during the fourth quarter. From a broader UAE perspective, the quarter is expected to be robust. The global attention on COP28 is expected to shine an even brighter spotlight on the UAE and Dubai as sought-after destinations.
Investment Outlook:
In terms of hospitality investments, the UAE's outlook showcases hotel and residential projects worth $301.7 billion currently under development. Moreover, the broader Middle East is witnessing the development of hospitality and residential projects totaling $1.9 trillion. Of this, Saudi Arabia, the UAE, and Egypt constitute 90% of the total investment.
A considerable volume of transactions related to hospitality assets is at an advanced stage of negotiation. High-profile properties are expected to change hands in the coming months, according to global real estate consultancy Colliers.
Growth and Expansion:
- Rove Hotels, a mid-market brand, plans to expand its presence across the Middle East. Their goal is to have 10,000 rooms in operation or under development within the next five years, a substantial increase from the current 3,400 operational hotel rooms. Rove Hotels is also exploring opportunities in the residential property market following the successful sell-out of their first branded residence projects.
- Hilton is committed to increasing its footprint in the Middle East by more than 125%. They have a series of hotel openings in the pipeline, including properties like Waldorf Astoria Doha West Bay, Conrad Bahrain Financial Harbour, Hilton Riyadh Olaya, Hilton Cairo Nile Maadi, Embassy Suites by Hilton Dubai Business Bay, and Hampton by Hilton Kuwait Salmiya. Their growth strategy includes the opening of close to 100 hotels, totaling nearly 25,000 rooms in the Middle East. Additionally, around 70% of Hilton's Middle East projects are currently under construction.
These developments collectively paint an optimistic picture for the hospitality sector in the UAE and the broader Middle East.
