Arab Spring: hoteliers expect the return of the flock

More than two years after the beginning of the Arab Spring, the perception of Egypt and Tunisia abroad continues to weigh on the performance of their international hotels. Morocco was relatively unaffected by the regional geopolitical context, while Turkey, which had hitherto greatly benefited from the displacement of foreign clients, has recently been seeing the trend becoming less positive than before due to its own inner-turmoil.

The figures collected by MKG Hospitality on international hotel chains highlight the close relationship between hotel performance in tourist destinations in the Arab world and the chronology of events of what is now called the Arab Spring.Since 2011, Tunisian and Egyptian hoteliers have strongly suffered from a sudden slowdown in attendance. In Tunisia, as in Egypt, international hotel attendance decreased by a third between 2010 and 2011, occupancy rates of internationally branded hotels dropping from 60.2% to 40.2% in Tunisia and 74.3 % to 46.3% in Egypt.

Beyond attendance, the loss of customers was also felt on hotel turnover, down 22% over the period in Tunisia and 43% in Egypt in current local currency, that is to say, before factoring in the impact of inflation in these countries (more than 11% in Egypt in 2011, thus adding to the revenue loss), or changes in their currencies vis-à-vis the euro and the dollar which deepens the loss for an international investor. With hotel occupancy rates of 43.9% in Tunisia and 50.2% in Egypt over the first seven months of 2013, these two destinations, once among favourites for international tourists, are still significantly below their 2010 attendance marks (60.2%in Tunisia and 74.3% in Egypt).

While the Arab Spring seems to have yielded a limited impact on some tourist destinations such as Morocco,others have actually been able to take advantage of the negative image of its neighbors, like Turkey. While spared the events of the Arab Spring, the activity of the Turkish hotel industry has benefited from the combined effect of strong growth in its domestic economy and tourism and of additional flows of international tourists from other countries. With strong demand growth over the period, Turkish hoteliers were able to record a 3.1percentage point increase in occupancy rates between 2010 and 2013.

First demonstrations in Turkey could forebode upcoming changes in the regional tourism market. Indeed, hotel occupancy rates dropped from 71% to 57.6% in Turkey between June and July, although the one-off lack of Middle Eastern customers during Ramadan also played a role in this decrease. In contrast, Moroccan professionals were pleased with their summer season, especially in August.

To date, the Egyptian and Tunisian hotel industries are still expecting a rebound in attendance. While in the medium-term potential for tourism development in these countries is considerable, as shown by the very strong supply and demand growth in Turkey in recent years, they are still suffering from geopolitical uncertainties in 2013. Moroccan hoteliers, who had not benefited from significant spill-over effects before the protests in Turkey, will certainly keep an eye on regional geopolitics. Other Mediterranean countries could also take this opportunity to accelerate the development of their tourism offer.

Georges Panayotis, President of MKG Group, said: "It is hoped that the Tunisian and Egyptian hotel activity soon sees the first sprouts after passing through a difficult winter, and that Morocco will soon harvest the fruits of a more favorable environment."