Middle East’s Hotel Construction Pipeline Shows Slight Deceleration in Q1

PORTSMOUTH, NH—Analysts at Lodging Econometrics (LE) state that in the first quarter of 2020, the hotel construction pipeline in the Middle East decelerated slightly to 607 projects/172,182 rooms, down 3% and 5% respectively, year-over-year (YOY).

Projects currently under construction are at 357 projects/114,817 rooms. Projects scheduled to start construction in the next 12 months stand at 113 projects/27,872 rooms, and projects in the early planning stage are at 137 projects/29,493 rooms. The Middle East had 15 new hotels/6,527 rooms open in the first quarter of 2020.

Countries with the greatest number of projects in the construction pipeline are Saudi Arabia with 213 projects/69,038 rooms and the United Arab Emirates with 186 projects/56,188 rooms. Following distantly is Egypt with a record 65 projects/16,133 rooms, then Qatar with 56 projects/13,965 rooms and Oman with 39 projects/7,545 rooms. Dubai continues to lead the construction pipeline in the United Arab Emirates with 147 projects/45,647 rooms.

Cities with the largest hotel construction pipelines are the Provincial region with 70 projects/14,425 rooms; Riyadh with 61 projects/11,892 rooms; Jeddah with 52 projects/11,099 rooms; Doha, Qatar, with 49 projects/11,660 rooms and Makkah with 30 projects/31,622 rooms. In the Middle East, 47% of the rooms in the construction pipeline are found within these five cities.

In the first quarter of 2020, Marriott International was the top franchise company in the Middle East with a record 97 projects (24,278 rooms). Next was Hilton with 94 projects/25,730 rooms and then Accor with 91 projects/26,883 rooms.

The leading brands in the pipeline for these companies are Marriott’s Courtyard with 23 projects/4,832 rooms and Residence Inn with 17 projects/2,057 rooms. Both of these brands are at record highs. Hilton’s top brands are DoubleTree with 27 projects/6,711 rooms and Hilton Hotels & Resorts with 21 projects/6,716 rooms; Accor’s top brands are the Ibis brands with 14 projects/4,762 rooms, Adagio City Aparthotel with 12 projects/2,476 rooms and Novotel with 11 projects/4,027 rooms.

As is seen in the rest of the world, the Middle East is working to devise a plan that will allow the region to open safely and revitalize its economy. Plans vary from country to country, with Saudi Arabia, which is responsible for 40% of the rooms in the region’s hotel construction pipeline, starting a three-phase reopening plan on May 28th. The hope is that by phase three of the plan, beginning on June 21st, all restrictions will be removed with the exception of international travel into the country. Additionally, the World Expo 2020 scheduled to be held in Dubai this year, has been formally postponed until October 2021, which could result in several new hotels delaying their openings.

COVID-19 did not have a full impact on first-quarter 2020 Middle East results reported by LE. LE’s market intelligence department has and will continue to gather the necessary global intelligence on the supply side of the lodging industry and make that information available to its subscribers. It is still early to predict the full impact of the outbreak on the lodging industry. LE will have more information to report in the coming months.