Elie Younes and Bernard Forster
following excerpt was taken from a report titled "Middle
East Hotel Markets; Outlooks, Trends and Opportunities,
and Hotel Valuation Index." Published in spring
2006, it was prepared by the London office of Hotel
Valuation Services International (HVS International).
to the EIU, real GDP growth in the UAE is forecast to
be around 6% over the next two years. The booming economy
is driving higher inflation
(projected to be approximately 5% in 2005).
government is pressing ahead with its reform programmes,
and multibillion-dollar infrastructure, real estate
and tourism projects are taking place in the country
with Dubai and, now, Abu Dhabi being at the forefront.
number of visitor arrivals in the UAE increased by approximately
8% in 2005, with Dubai and Abu Dhabi absorbing most
of the growth (in actual terms).
is now one of the leading destinations worldwide in
terms of transient leisure and business demand, and
it appears that Abu Dhabi is being carried along by
hotels in Dubai achieved staggering RevPAR growth of
almost 40% in 2005: RevPAR climbed from US$124 in 2004
to US$171 in 2005.
spite of the aggressive pricing attitude of the hotels
and the new supply that became fully operational during
the year (Park Hyatt, Le Meridien Grosvenor House, Radisson
SAS, Villa Rotana Suites, Al Mourooj Rotana) occupancy
was 85%, compared to 86% in 2004.
average room rate grew by approximately 40% on 2004,
to US$202. GOPPAR was estimated to be US$180, an improvement
on 2004 of a phenomenal 60%.
shown in Table 13, 17,000 rooms are likely to enter
the market in Dubai over the next four years, and this
will undoubtedly have an impact on the trading performance
of the market, resulting in a likely correction (return
to 'normality') between 2008 and 2009.
would highlight that as a considerable proportion of
the new supply is located on The Palm, Jumeirah, some
hotels may not enter the market in 2007 and 2008 as
currently planned. This depends on the severity of the
correction and on the likely completion date of Palm
Island. RevPAR in Abu Dhabi was US$110 in 2005, an increase
of 47% on 2004.
was driven primarily by an uplift of 40% in average
rate and an increase in occupancy of one percentage
point (which came despite the opening of the new Kempinski
Palace Hotel in 2005).
was US$93, an impressive 87% higher than it was in 2004.
Due to the limited amount of new supply entering the
Abu Dhabi market between 2006 and 2008, we expect the
market to benefit from continued growth in trading performance
over the next few years; this will undoubtedly further
stimulate investor appetite.
13 illustrates the new hotel supply that is likely to
enter Dubai and Abu Dhabi over the next five years.
As of January 2006 hotel investment values in Dubai
were US$450,000, the highest in our Middle East HVI,
reflecting a regional penetration of approximately 200%.
would highlight that our HVI excludes the underperforming
assets in the market (such as the four-star hotel properties
in Deira). According to our assessment, hotel values
in Abu Dhabi were around US$290,000, and values are
likely to experience further growth by the end of 2006.
Younes and Bernard Forster are Directors of HVS International's
office heading the Middle East and Africa region. For
more information about the Middle East markets, please
contact Mr. Younes at email@example.com,
+44 (0)20 7878 7728, and Mr. Forster at firstname.lastname@example.org,
+44 (0)20 7878 7719.
HVS International 2006