Don’t let softness in first-quarter performance data in the Middle East fool you. The region as a whole still posts some of the strongest numbers in the global hotel industry on an absolute basis, according to a presentation from STR Global’s Elizabeth Winkle during the Arabian Hotel Investment Conference.
Year to date through March on a constant-currency basis, the region reported decreases in the three key performance metrics of occupancy (-1.2%), average daily rate (-0.7%) and revenue per available room (-1.9%), when reported in U.S. dollars.
On an absolute basis, however, its performance was near the top of the 15 global subregions tracked by STR Global, which is a sister company of Hotel News Now. The Middle East finished the quarter with occupancy of 73.9% (behind only the Caribbean and Australia and Oceania), ADR of $215.15 (behind only the Caribbean) and RevPAR of $158.99 (behind only the Caribbean).
Winkle attributed the quarter-over-quarter decreases to an exceptionally strong first quarter in 2014 as well as some pressure from increased supply.
She characterized the slight performance dip as “nothing overly concerning from our perspective.”
Supply growth is a fact of life in the Middle East, the result of investors realizing the enormous potential in this emerging region, Winkle explained.
During the first quarter, supply growth was nearly 6% with demand growth trailing at approximately 4.5%.
The 12-month-moving-average (which removes seasonal fluctuations) paints a more favorable picture, with demand outpacing supply growth of 7.6% compared to 5.7%, Winkle said.
Looking through the same analytical lens, occupancy is up 1.8% while ADR is down by 0.2%.
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