Arab Spring Still Affecting Bahrain’s and Egypt’s Hotel Markets

A year after the start of the Arab Spring, according to STR Global’s 2011 year-end data, demand has not yet returned to Egypt, Bahrain, and the Levant region.

Occupancy fell by 29.5 percentage points to 36.1 percent in Cairo, Egypt, the scene of widely publicized protests, and the average daily rate (ADR) fell by 3.3 percent to EGP706.26. Occupancy levels in Sharm El Sheikh, Egypt, and Hurghada, Egypt, which are both well-liked vacation spots, were 48.1 percent (-38.6 percent) and 57.2 percent (-28.7 percent), respectively. Unlike Cairo, ADR decreased more in Sharm El Sheikh (-17.3 percent) to EGP333.69 and Hurghada (-6.2 percent) to EGP329.15, as hoteliers tried to maintain demand volume by lowering rates.

In the Levant, demand decreased in major cities like Amman, Jordan, and Beirut, Lebanon (-12.2 percent).

Despite the fact that the majority of the unrest has been occurring in Syria and Egypt, there was a RevPAR decline of 22.2% in Beirut and 9.2% in Amman as a result.

Change in Supply/Demand Ratio Year-to-December 2011

Following the political unrest in February, Manama, Bahrain, on the Arabian Peninsula, saw the greatest decline in demand overall. As a result, from January through December 2011, occupancy and rate decreased by 37.6 and 12.9 percent, respectively, and were reported at 41.6 percent occupancy and BHD77.44 ADR.

Kuwait experienced a significant occupancy growth (+10.7 percent) in 2011 despite its limited new supply. Both Dubai, United Arab Emirates, and Riyadh, Saudi Arabia, reported occupancy increases of 7.0 percent and 2.5 percent, respectively, due to strong demand growth. In Riyadh and Dubai, respectively, ADR increased by 6.4 and 3.4 percent.

Flat occupancy rates (60.6%) and only a slight increase in ADR (+0.7%) were the result of new supply in Doha, Qatar (+13.0 percent) and matching demand growth at 13.0 percent.

Monthly regional RevPAR change for 2011

“Travelers on vacation and on business are looking for alternate locations because of the unrest in Egypt and Northern Africa. As a result, hotels in the Arabian Peninsula experienced a 13.2 percent increase in demand “Elizabeth Randall, managing director at STR Global, commented. “Prior to anticipating a significant increase in tourist numbers, security in the area will be crucial. The good news about the 2011 performance is that the average rate in Northern Africa, Egypt, and the Levant region has remained flat with the prior year (-0.5% in USD) and declining occupancy has begun to show signs of stability in the second half of the year “.