Unprecedented upheaval across Middle East impacted the hospitality sector, however, the industry will bounce back as early as next year with projected growth of 4%, according to a report.
“The Middle East is experiencing notable drop in international tourist arrivals as a result of regional instability. It states, however, that growth in the tourism industry is expected to stabilize from 2012 at growth rate of 4% per annum, “Deloitte in its latest report on Travel, Hospitality and Tourism titled ‘E Vision’, said.
“While there will be uncertainty in the short to medium term, the fundamentals for travel and tourism growth in the Middle East region are strong and will prevail to assure long-term sustainability of the market”, said Alex Kyriakidis, Deloitte Global Managing Director, Travel, Hospitality and Leisure.
“The continuing investment in word-class infrastructure in numerous countries within the Middle East exudes optimism pertaining to the performance of the hospitality and tourism industries,” he added.
According to the report, optimism pertaining to the future of travel, hospitality and tourism is largely attributable to the region’s unique characteristics.
Firstly, the Middle East leads the world in investment in hospitality infrastructure, with new and innovative products on offer such as the Burj Khalifa in Dubai and the Formula 1 theme park in Abu Dhabi.
Secondly, the region boasts the world’s highest passenger traffic. In 2010 indicators such as Revenue Passenger Kilometer (RPK) and Available Seat Passenger (ASK) experienced growth at the rates of 17.80% and 13.20% respectively. This trend is expected to continue as airport capacity in regional hubs is expanding.
Thirdly, a higher oil price and reluctant increases in regional government revenues allows for growth in infrastructure expenditure and investment, as well as fueling stronger domestic demand.
The report added that while mergers and acquisitions in the Middle East hospitality sector suffered in the first quarter of 2011 as a result of regional tensions, the deal volume will gradually pick up over the next two years particularly if the dollar depreciates against other major currencies enticing non-dollar dominated investors to the region.
“The Middle East is undoubtedly a hub for air travel and tourism, as evidenced by the reported figures. They highlight the potential of an increase in tourist arrivals in the future. The diversification of hotel product into branded mid-market and budget hotels means that the Middle East will appeal to a greater cross-section of tourists, from the upscale traveler to the budget conscious traveler,” added Kyriakidis.