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Middle East has world’s strongest hospitality sector, says new report

Hotel rates in the region have averaged $160 per night year-to-date in 2023.

Middle East has world’s strongest hospitality sector, says new report
[Source photo: Anvita Gupta/Fast Company Middle East]

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The Middle East’s hospitality industry has been making a strong comeback after the COVID-19 pandemic. According to an August report by HSBC, the region recorded the strongest post-pandemic rebound globally, even though the global economy is still struggling.

In 2022, luxury hotel projects in Dubai, the UAE’s top tourist destination, accounted for more than half of all planned hotel projects in the emirate. Meanwhile, Riyadh, Saudi Arabia, led the region in the number of hotel projects, driven by the Kingdom’s Vision 2030 plan.

According to recent data from hospitality data analytics firm STR, The Middle East has the strongest hotel market this year based on occupancy, revenue per available room (RevPar), and average room rate.

Hotels in the Middle East have an average room rate of $160 year-to-date in 2023, compared to $142 for US hotels, $141 for European hotels, and $90 for Asian hotels.

Dubai, the Middle East’s travel and tourism hub, has an average room rate of $171, with occupancy at 76%, while Abu Dhabi hotels have an average room rate of $130 and occupancy of 70% year-to-date.

Jeddah, Saudi Arabia, has the highest average room rate in the region, at $220.

“As it stands, you can argue that the Middle East is the strongest hotel market in the world,” said Philip Wooller, area director for the Middle East and Africa at STR.

According to HSBC, the Middle East has the highest percentage of GDP from tourism, at 5%. This suggests that the region is well-positioned to benefit from the ongoing recovery in the tourism industry in the coming year.

The report found that 15% more tourists visited the Middle East in the first three months of 2023 than in the first three months of 2019.

Dubai hotels’ RevPar is expected to grow 1.6% in 2023 and 1.9% in 2024, driven by occupancy growth, according to Kelsey Fenerty, analytics manager at STR.

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