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Record growth in Middle East

Dubai, Qatar, Bahrain: these new destinations, built on sand, demonstrate faultless solidity. RevPARs are boosted by average daily rates that are constantly on the rise, while hotels remain full. All confess that future perspectives look radiant.

Growth of tourism in the Persian Gulf has not slowed. Irak’s proximity and the geopolitical instability in the region are not a hindrance for this region with its flourishing community. For hotels in the countries of the GCC (Gulf Co-opération Council), May has been like the previous months: excellent. On 12 cumulated months, the RevPAR leapt by 30%. To the advantage of average daily rates that have constantly increased since 2004. A high was reached last February with an average daily rate of 116 euros throughout the area, resulting in record growth by 45% over 2004. This sensible increase in rates has no affect on the interest of an ever-growing clientele for Gulf destinations. Occupancy rates are nearing 80%. Thanks in particular to the growth of intra-regional tourism, demand is constant year-round, absorbing the many openings over recent years.With such results that are more than satisfactory, investors – mostly from GCC countries – are scrambling, check in hand. 80 hotels with sometimes surprising concepts are in the works. What will happen once all these projects will have risen out of the earth? The hotel industry should stabilise starting from mid-2007 and in 2008. “This strong increase in supply should result in a temporary drop in occupancy from 80% to 70%”, forecasts Toufic Tamim. Such a drop should only be temporary, whereas authorities are concentrating their efforts on promoting the appeal of their destination non-stop. According to the WTTC, growth in demand is estimated at 4.8% in 2005, a rhythm that should continue until 2015. The tourism industry should generate $ 128.6 billion in 2005 and $ 220 billion in 2015. The future presents itself under the best auspices for Middle Eastern hoteliers.The economic heart of the region, Saudi Arabia, stands apart from this trend. Occupancy rates are significantly lower there: 59.6% on twelve cumulated months, but up with respect to 2004 (58.3%). Consequence: hoteliers do not have the same latitude to make their average daily rates evolve as they are higher than those in neigh-bouring countries. The month of May is no exception to this rule. “This month is traditionally calm due to the drop in business tourism and the low season for pilgrimages to Mecca and Medina,” explains Toufic Tamim, director Sales and Marketing Middle East for the group Mövenpick. Yet, business tourism and religious tourism represent nearly the entire clientele mix of a country where leisure tourism is not very developed.Inversely, Dubai leads the dance with an occupancy rate over 85% and average daily rates that are exploding (+51.1% in May). And that regardless of the property’s location, along Jumeirah Beach or on Burj Dubai. The emirate of Al Makhtoum plays on all fronts at once. Its activity relies on both individual and group leisure tourism, business clientele, seminars. This fashionable destination is on the world map for major events in business tourism. “Internationally, players in tourism seem to be talking only about Dubai,” observes Toufic Tamim. Pharaonic tourism projects, with Palm Islands at the top, are all arguments for marketing the destination. At the crossroads of Europe and Asia, Dubai benefits from growing traffic, backed by the strategy of national airlines that impose a stopover in their attractive packages.Doha, Abu Dhabi or Manama: the other destinations in the region are not left behind. “Doha, like Dubai, enjoys a demand that is higher than its room capacity,” remarks Toufic Tamim. Qatar and Bahrain see their business rely on an equivalent clientele mix that is mostly regional: the individual business and seminar client. Another source of clientele for these markets is consultants and foreign entrepreneurs who come to these countries to work on major projects – electricity, gas and, of course, petrol – generating longer stays, between three and six days on average. Kuwait, one of the cities in the world with the highest average daily rates, benefited a great deal in the last two years form the consequences of the war in Iraq. American oil companies, such as Halliburton, and others, are participating in the effort to reconstruct the neighbouring country, and elected domicile in the Emirate. Today this well seems to be drying up. “It appears that this clientele will be on a decline starting this summer. Some companies are reducing their personnel on site or locating directly in Iraq or Jordan,” explains Toufic Tamim. Furthermore, the growth of the hotel supply impacted the occupancy of properties.

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