Hospitality markets across MENA witnessed a negative performance in 2016 compared to 2015, according to the EY Middle East Hotel Benchmark Survey Report. The majority of markets experienced a drop in RevPAR due to a slower global economy, making 2016 a challenging year for the hospitality industry. In Saudi Arabia, the hospitality market fluctuated considerably and the cities of Jeddah, Madinah, Makkah, and Riyadh experienced a decrease in their occupancy. As a result, their average rooms yield for 2016 fell despite any increases among the average room rates. Jeddah experienced a 6% points decrease in its occupancy falling from 76% in 2015 to 70% in 2016. The average room rate remained consistent at $277 for both 2015 and 2016. The average room yield fell 7.1% from $211 in 2015 to $196 in 2016. In Madinah, occupancy fell by 13% points from 73% in 2015 to 60% in 2016. However, the average room rate increased by 4.1% from $221 in 2015 to $230 in 2016. The average room yield decreased by 13.7% falling from $161 in 2015 to $139 in 2016. Makkah saw a 6% points decrease in average occupancy from 53% in 2015 to 47% in 2016. Yet its average room rate increased by 6.5% going from $269 in 2015 to $287 in 2016. However, the overall average room yield still dropped by 6% going from $144 in 2015 to $135 in 2016. In Riyadh, the average occupancy dropped by 8% going from 64% in 2015 to 56% in 2016. The average room rates also dropped by 9.5% from $210 in 2015 to $190 in 2016. The overall average room yield fell by 20% as 2015 had a stronger performance at $135 compared to $108 in 2016. Riyadh's hospitality market experienced one of the steepest declines in RevPAR within the region, which may be attributed to an oversupply of hotel rooms, restricted government expenditure, and the drop in oil prices. The Middle East Hotel Benchmark Survey Report, produced by EY, provides a monthly and year-to-date performance overview of leading hotels in the Middle East. The hotel set includes international branded and operated properties across the five-star and four-star segments. Yousef Wahbah, MENA Head of Transaction Real Estate at EY, said: "The hospitality market was greatly affected by the drop in oil prices over 2015 and 2016 forcing many hotels to lower their room rates whilst also suffering from lower occupancy. However, some cities, such as Cairo and Ras Al Khaimah, managed to increase both occupancy and room rates for overall higher revenues per room." During 2016, the Dubai market registered the highest RevPAR of $200, followed by Jeddah, which registered a RevPAR of $196. Dubai also had the highest occupancy rate in 2016 at 80% while Ras Al Khaimah achieved the second highest occupancy at 72.1%. The highest room rates of 2016 were recorded in Saudi Arabia, with an average daily rate of $287 in Makkah and Jeddah averaging at $277. Cairo's hospitality market experienced a growth across all KPIs in 2016, resulting in the highest increase in room yield compared to 2015 and a RevPAR of 62.7%, due to continued political stability in the country. "The hospitality market across MENA in 2017 is expected to have a slow performance as the economy slowly adjusts to new trade agreements and currency fluctuations. It can be predicted that some markets may benefit from key annual events such as the Hajj pilgrimage, shopping festivals, and global forums, but the overall sentiment is that it will be another challenging year for the hotel industry," Yousef added. — SG
