Changing market dynamics threaten hotel performance

Changing market dynamics threaten hotel performance

Although hotels in the Middle East continue to outperform global average, increased local and regional competition set against a backdrop of global economic uncertainty, has put new and enhanced revenue streams firmly front of mind for hotel owners and operators.

Dubai-headquartered hospitality company, First and Foremost Hotels and Resorts, is witnessing increasing demand from owners, operators and investors, fully aware that the risk to their business performance is very real.

According to CEO, Michael Scully, there are three main areas of concern. “So far Dubai in particular has benefitted from unrest in other parts of the region, such as Tunisia, Bahrain, Egypt, Syria and more recently Lebanon. However, it would be foolish for any business here to rely on that revenue stream,” said Scully.

“Equally, the global economic outlook is uncertain, the Eurozone is in turmoil, the UK is in recession, even China’s export-led economy is experiencing slowing growth. And if some of these traditional markets dry up, new ones will be needed to replace them,” he added.

“Finally, despite massive growth in the number of hotel rooms, the Dubai market, for example, has shown remarkable resilience so far, but the rollout of a further 11,307 rooms in the next couple of years, could squeeze business elsewhere,” commented Scully.

However current levels of business are impressive, recent Q2 results from major international chain Starwood, showed a 11.2% RevPAR increase for the region, way ahead of its 6.9%, global average.

Gary Marshall
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Gary Marshall
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Middle East

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