In 2013, the Middle East region continued to witness turmoil and instability, and at the same time, it achieved historical milestones and while some of the countries endure chaos, others manage to capitalize on their stability, reporting unprecedented growth, thereby rendering regional tourism dynamic, yet at the same time contrasting.
The Middle East Hotel Survey 2014 Edition strives to constitute a reference guide by offering a comprehensive analysis of the overall economic performance of the region, with particular focus on the tourism industry.
Our tourism analysis is based on data originating from 467 established hotels(excluding newly opened hotels) in the region, representing roughly 127,000 rooms; an increase of 7% over 2013 participating hotels.
In addition to the Middle East selected countries, our analysis incorporates, where available, supply, pipeline and hotel performance analysis originating from Turkey and Egypt.
Moreover, the current edition includes a detailed performance analysis of year-end key operating performance indices, with a breakdown between five-star properties and midscale properties across the region. For the purpose of this analysis, the term "midscale" refers to four-star and three-star branded properties in the region.
In order to further enhance the value of the information contained herein, HVS has introduced a section dedicated to the 2013 Gross Operating Profit analysis , along with a section dedicated to current and future tourism trends.
Middle East In Figures- 53 million – tourists arrivals in Middle East in 2013;
- 66 million – passengers movements at Dubai International Airport in 2013;
- 339.7 million – national and resident population of the Middle East;
- USD105,000 – GDP per capita of Qatar, as the highest in the world;
- 28th worldwide – UAE's rank in the World Economic Forum Travel & Tourism Competitiveness Index;
- USD2.5 trillion – investment worth of projects in GCC in 2013;
- USD167 billion – regional tourism total contribution to GDP in 2013;
- USD278 billion – regional tourism forecast total contribution to GDP by 2024;
- 2.4 million – jobs to be sustained by the tourism and travel sector by 2024;
- USD24.5 billion – tourism capital investment in Middle East in 2013.
Economic OverviewIn spite of the regional unrest and the volatility witnessed in 2013, the Middle East and North Africa (MENA) region remains one of the fastest growing regions worldwide, owing predominantly to the strong GCC economies, while transition countries such as Lebanon, Syria, Jordan and Egypt impede the aggregate regional growth rate.
The region is forecast to grow by approximately 3%, representing one percentage point over the growth reported in 2013.
FIGURE 1: ECONOMIC PERFORMANCE MENA REGION: 2000-2016
On the back of political unrest, large budget deficits, low public spending on infrastructure and development and lack or insufficient foreign direct investments, the growth rate expected for the economies in transition has fallen, with current estimates sitting at approximately 3%.
On the other hand, the resource-rich GCC economies continue to flourish, with estimated growth rates for 2014 standing at 4.6%. The GCC growth is triggered predominantly by high oil prices, considerable government spending on infrastructure and development, government initiatives to develop non-oil related sectors and considerable foreign direct investments. This is reflected in the forecast growth rates for the real GCC non-oil GDP between 2014 and 2015.
FIGURE 2: FINANCIAL FLOW MENA REGION 2008-2016
In terms of economic performance, The World Economic Forum Economic Competitiveness Index 2012-2013 indicates Qatar as the best performing economy, followed by Saudi Arabia and the United Arab Emirates.
In 2014, the economic growth is projected to expand by 2.8%, reaching up to 3.5% by 2016. Overall, the regional growth remains subject to a series of risk factors and is expected to remain below its real potential, as improvements in the political stability in some parts of the Middle East are not expected in the short-term.
According to World Bank 2012 estimates, the region accounts for approximately 339.6 million nationals and residents, out of which 60.0% is comprised of urban population.
With a growth rate of approximately 61.0% reported over the past 20 years, Middle East population growth is among the highest worldwide, surpassing even the population growth rates reported by China and India over certain years.
FIGURE 3: POPULATION
FIGURE 4: GDP PER CAPITA (USD)
Among other factors, the accelerated population growth provides an opportunity for economic expansion in the region as it offers incremental labour resources, which in turn promotes a larger market place and a higher GDP.
Some Gulf Cooperation Council (GCC) countries such as the United Arab Emirates and Qatar are witnessing an influx of additional expatriates, owing to the fast-paced development of their economies and the massive infrastructure
projects under development in preparation for the FIFA World Cup 2022 in Qatar and the World Expo 2020 in Dubai.
In the long-term, youth population growth coupled with increased private consumption and higher government budget expenditure will serve as a platform for growing investment in MENA region.
FIGURE 5: MENA LABOUR MARKETS
Regional Construction Developments
Triggered mainly by the GCC developing economies, the region is currently witnessing a massive transformation, with major infrastructure projects and mixed-use developments in planning or already in the construction stage.
According to Zawya's GCC Projects Report 2013, the total worth of projects in the GCC exceeded USD2.5 trillion, representing approximately 63.0% of the total worth of projects planned or under development in the Middle East.
The United Arab Emirates leads this statistic in terms of value, with projects worth in excess of USD900 billion, while Saudi Arabia and Qatar follow, with projects worth in excess of USD770 billion and USD320 billion, respectively.
For countries such as the UAE and Qatar, the considerable investment in projects is driven on one hand by the goal to honour commitments related to hosting the FIFA World Cup 2022 and the World Expo 2020, and on the other hand by the vision and the clear targets set within their strategic development plans.
FIGURE 7: GCC PROJECTS MIX
These plans are The 2020 Vision for Dubai and the 2030 National Vision for Qatar. Similarly, under the Ninth Development Plan, Saudi Arabia has set as a goal to invest in excess of USD350 billion for infrastructure development.
According to Deutsche Bank, Dubai alone will be requiring an infrastructure development investment of approximately USD43 billion in order to host the World Expo 2020, while Qatar's infrastructure investment in preparation for the FIFA World Cup 2022 is estimated at roughly USD150 billion. As such, 40.0% of Qatar's budget for the next two years is allocated to infrastructure development.
In spite of the massive infrastructure development commitments, the GCC construction market is led by the real-estate sector, which accounts for nearly half of the total construction projects, while the infrastructure, oil & gas and the power & water sectors account for only 26.0%, 18.0% and 8.0%, respectively.
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