Mid East declared fastest growing tourism region

HotelBenchmark report points to Dubai and Qatar as leading the way

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By  Sarah Gain Published  September 1, 2006

The Middle East is set to achieve the highest growth rate of international tourist arrivals of any world region over the next 15 years, according to the latest edition of the HotelBenchmark Middle East Performance Review, The sky’s the limit. Travel and tourism is expected to generate around US $148 billion during 2006, with Dubai and Qatar leading the way in RevPAR and GDP. “Qatar is expected to be the fastest growing economy in the Middle East during 2006, with GDP growth up 9.3%,” the report states. Globally, international tourist arrivals reached 808 million in 2005, an increase of 6% on the previous year. During 2005, the World Tourism Organisation (UNWTO) estimates that the Middle East will attract 38 million international arrivals, taking a 4.8% share of the global market. Future prospects look good, and the UNWTO expects the Middle East to witness an average annual growth rate of 6.7% — the highest in the world — leading to around 68.5 million international arrivals by 2020. Hotel occupancy and rate growth has mirrored this astronomical climb, but now industry experts are questioning the sustainability of this growth. Comparing the first quarter of 2006 with figures from the same period last year, the Middle East continues to grow, but at almost 50% slower than the rate of 2005. Dubai remains in pole position, and, according to HotelBenchmark is reported to be “the fastest growing place on earth”. However, while average room rates soared up 18.6% to hit $286 — amongst the highest room rates in the world — occupancy dipped to 87%. “Some analysts suggest Dubai’s hotel market is overheating, but with government predictions that tourist numbers will increase dramatically from six million to 15 million in just five years, and with little new supply expected during 2006, Dubai hotels can expect another strong year,” the HotelBenchmark report maintains. However, hotel industry consultant, Guy Wilkinson, is not convinced by the sustainability of Dubai’s growth. He believes that eventually prices and occupancies in the emirate will drop. “Dubai will become a normal tourist destination,” he told Hotelier Middle East. “There is foreseeable demand for some of the hotels, but in a couple of years’ time there will be a market correction, or possibly a downturn in the market. Prices will soften and there will be rate competition. The announcement of easyhotels, Express by Holiday Inn, Ibis and the like opening up, are all going to exert a downward pull on the rates as well; although you can argue that this will provide clear segmentation in the market for those wanting mid-tier and those wanting five-star,” Wilkinson said. However, one question that remains unanswered is not the shortage of hotel rooms, but the demand for trained staff to fill all the new hotels waiting to come online. “New hotels require a new workforce and the issue of availability of staff remains. Whether or not the traditional Indian workforces currently employed across the region will choose to return to their own booming hotel sector is still not certain,” the report questioned. However, with forecasts from the World Travel and Tourism Council suggesting the region’s travel and tourism industry will rise to $279 billion by 2016, hoteliers can afford to up the ante on their recruitment drives.

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