Covid may impact opening of future hotel projects as international tourism drops
The UAE hospitality sector, hit hard by the coronavirus outbreak, would start its recovery in the fourth quarter of 2020 due to improvement in domestic tourism with a focus on family staycations, say hoteliers and industry analysts.
The hotel pipeline forecast for the UAE and region looks robust over the next few years despite the blow of coronavirus on the industry and economy as a whole.
In its latest report, Colliers International said most hotel investors remain hopeful for a relatively quick recovery period.
"Around 46 per cent of respondents expect the recovery period will begin in the fourth quarter of 2020," said Christopher Lund, head of hotels for Mena at Colliers International.
Vincent Miccolis, Ascott's regional general manager for Middle East, Africa, Turkey and India, said recovery will be gradual.
"We anticipate that the hospitality sector's revival will be phased over the next six to 18 months, based on improved global market sentiment, a brand's precautionary safety measures, staggered approaches to bring back commercial demand, and generation of appropriate stimuli for people to resume travel. Hospitality is interlinked with travel, and so the full recovery will depend on aspects such as travel restrictions and resumption of airline activity," said Miccolis.
"We expect to witness early signs of recovery mainly from the domestic market, and so we will initially place our efforts on the local market with a family staycation offer that can cater to the anticipated demand and the needs of our guests. Thereafter, we forecast the need from select international markets for extended stays, as well as for project-related business to resume as restrictions continue to be relaxed," he added.
The World Tourism Organisation also said on Thursday said that the estimates regarding the recovery of international travel is more positive in Africa and the Middle East with most experts foreseeing recovery still in 2020.
Wael El Behi, general manager at the Ramada by Wyndham Jumeirah Hotel, also expects recovery will start from fourth quarter this year but "realistically it will be more towards 2021."
Moussa El Hayek, chief operating officer of Al Bustan Centre and Residence, said following recent intimation that Dubai hopefully will reopen for tourists by July, "we are optimistic that the situation will improve. If not, it will be delayed until September. It's unpredictable, but we are seeing indications of reopening even if it's gradual".
New UAE market supply
Colliers estimated that a total of 7,900 quality branded hospitality keys have entered the market in the UAE between the first quarters of 2019 and 2020, with 95 per cent of this new supply opened in Dubai. These branded hotel openings include Crowne Plaza Dubai Marina, Radisson Red Silicon Oasis and ME Dubai Hotel.
The UAE's hospitality industry is one of the hardest hit by the outbreak of Covid-19. With the UAE suspending all flights including transit at the end of the first quarter of 2020, international hospitality demand has seen a sharp decline.
Colliers said the market has seen an eight per cent increase in supply over the past year.
"The supply in the market is expected to increase at a compound annual growth rate of 12 per cent between 2020 and 2022. This will introduce an additional 35,200 keys in the market. The Covid-19 pandemic is expected to have an influence on hotel openings during this period. Government restrictions might have an impact on construction of hospitality projects, ultimately slowing down the completion of new projects in the country," Lund said.
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