Hospitality 2020: a year to remember or one to forget?

Hospitality 2020: a year to remember or one to forget?

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While Covid-19 hit the hospitality industry hard, hotel markets in the Arab world produced intriguing results. Kostas Nikolaidis, Middle East and Africa executive for STR, takes a closer look at the figures to determine the real impact of the coronavirus on the Middle East’s hospitality sector.

It’s official; the year 2020 was the worst in tourism history. Not only did international arrivals drop by 74 percent, according to the latest UNWTO World Tourism Barometer, but more than 100 million tourism jobs were threatened.
International arrivals to the Middle East declined by 76 percent, yet hotel demand decreased by a modest 34.4 percent. As a result, 34 million fewer hotel rooms were sold compared to the 2019 figure. This was a significant enough drop to send rigors across all regional hotel markets. Never has the industry faced so much adversity and uncertainty, which in turn has led to marked variations in hotel performance among different destinations.
It perhaps comes as no surprise that Makkah hotels suffered the steepest performance decline in 2020, with RevPAR down by 77.2 percent. Together with Medina, the Holy Cities of Islam saw their occupancies halve as travel restrictions meant almost zero religious tourism flows. An interesting observation is the difference in performance between the Saudi cities of Riyadh and Jeddah, where RevPAR declined by 25.8 percent and 57.6 percent respectively. A key differentiating factor is the significant room rate reduction in Jeddah coming from a very high ADR base of USD 250 down to USD 164. Despite the universally strong performance of coastal destinations in 2020, key business and government demand for Jeddah did not materialise, thus forcing the slide in performance. In contrast, the Eastern province cities of Al Khobar and Dammam recorded minimal hotel performance disruption, with RevPAR almost flat at -3.8 percent. Manama hoteliers at the other end of the King Fahd Causeway were heavily impacted by the travel bans, with hotels achieving average occupancy of only 27.9 percent. The Bahrain Formula 1 Grand Prix in November provided some muchneeded relief, resulting in more favourable occupancy rates. Manama hoteliers are hoping for similar or better results from the 2021 race, which is set to take place at the end of March 2021.
The UAE markets had to considerably adapt to overcome the adverse market conditions. Quarantine hotel demand somewhat cushioned the drops, particularly in the early months of the pandemic. This bought local authorities and hoteliers enough time to pivot their strategies and effectively target domestic demand while also trying to make the most of the “small windows of opportunity” and attract international travelers in between the multiple lockdowns. The smaller, more leisure-oriented emirates of Fujairah, Ras Al-Khaimah and Ajman welcomed solid staycation demand from those longing for a local getaway outside of the big cities. For Fujairah and Ras Al- Khaimah, this demand, combined with the relatively small hotel room inventory, even led to some gains, with hotel room rate growth of 10.1 percent and 13.2 percent respectively. Despite the numerous event cancelations and postponements — most notably EXPO 2020 — Dubai managed an incredible turnaround, benefiting greatly from staycations at its plethora of resorts. However, Dubai hotel RevPAR still dropped by 44.6 percent, underlining the heavy reliance on international travel and Dubai’s role as a key global travel hub. Abu Dhabi, on the other hand, was a solid performer throughout the pandemic. A combination of quarantine and long-stay demand, coupled with a smaller hotel market, kept hotel occupancy at 61.1 percent, the highest in the region and one of the highest for a capital city worldwide. Similarly, Doha — the host city of FIFA World Cup 2022 — experienced the lowest RevPAR drop in the world of just 18.4 percent, once again proving its resilience to sudden demand fluctuations. Furthermore, the dawn of 2021 saw the restoration of diplomatic ties with Qatar’s neighboring GCC countries — a welcome result for hoteliers in Qatar and the GCC and one that they will hopefully enjoy once Covid-19-related travel restrictions are lifted.
It is evident that the overall net balance of 2020 shows a loss. However, even if our subconscious compels us to forget about it, our conscious mind has learned valuable lessons that we all take into the future. Adversity has always been a catalyst for growth, after all. It is therefore appropriate to conclude with the thought, wish and expectation that the small but mighty Middle Eastern hospitality industry will step into 2021 cautiously, yet ready for the recovery and growth for which it is renowned.

Kostas Nicolaidis
Middle East & Africa Executive
STR

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Rita Ghantous

Rita Ghantous is a hospitality aficionado and a passionate writer with over 9 years’ experience in journalism and 5 years experience in the hospitality sector. Her passion for the performance arts and writing, started early. At 10 years old she was praised for her solo performance of the Beatles song “All My Love” accompanied by a guitarist, and was approached by a French talent scout during her school play. However, her love for writing was stronger. Fresh out of school, she became a freelance journalist for Noun Magazine and was awarded the Silver Award Cup for Outstanding Poetry, by The International Library of Poetry (Washington DC). She studied Business Management and earned a Masters degree from Saint Joseph University (USJ), her thesis was published in the Proche-Orient, Études en Management book. She then pursued a career in the hospitality industry but didn’t give up writing, that is why she launched the Four Points by Sheraton Le Verdun Newsletter. Her love for the industry and journalism led her to Hospitality Services - the organizers of the HORECA trade show in Lebanon, Saudi Arabia, Kuwait and Jordan, as well as Salon Du Chocolat, Beirut Cooking Festival, Whisky Live and other regional shows. She is currently the Publications Executive of Hospitality News Middle East, Taste & Flavors and Lebanon Traveler. It is with ultimate devotion for her magazines that she demonstrates her hospitality savoir-faire.

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