HOTELIER MIDDLE EASTGeneral Manager DebateMarket PresentationSeptember 2018
Christopher HewettDirector – TRI Consulting
1,300+Assignments
conducted across the region
30Operational Reviewsconducted since 2015
20 yearsAdvising clients in the
GCC, Middle East & Globally
75+Years of combined experience in TRI’s team of advisors
50Countries covered in
the Middle East, Europe, Asia and
Africa
TRI CONSULTINGKEY FACTS
Strategic planning is an essential component of the real estate developmentcycle. TRI Clients with strategic planning assistance in the following areas:
• Tourism master plans• Sector reviews• Identifying potential investment and/or conversion opportunities• Rationalising existing property portfolio and branding• Competitive benchmarking• Custom market research
Our involvement can range from providing a one time detailed review withrecommendations to a bespoke engagement over an extended period.
STRATEGIC PLANNING
Over the past decade, the process of selecting and negotiating hotelmanagement contracts with hotel companies across the Middle East hasbecome more sophisticated, complicated and competitive. We understandmanagement company branding, contract structure, major commercial termsand other owner and operator obligations. Our services include:
• Hotel operator search and selection• MOU / LOI review and negotiation• Hotel management agreement review and negotiation• Technical service agreement review and negotiation• Franchise agreement review and negotiation• Hotel Rebranding
HOTEL MANAGEMENT CONTRACTS
TRI provides development input for all phases of the development cycle but isparticularly renowned for the preparation of independent and objective marketand financial feasibility studies.
These reports are prepared in a form suitable for presentation to traditionalsources of finance and other relevant third parties, such as equity participantsand hotel operators. Our services include:
• Market and financial feasibility studies• Highest and best use studies• Market studies• Pre-feasibility studies• Site analyses• Financial analysis and cash flow modelling
PROJECT DEVELOPMENT
TRI has been commissioned to provide consulting services for existing hotel,resorts and real estate projects. These services are typically commissioned inorder to assist our clients with asset enhancement, increased cash flow andimproved value. These services include:
• Advice on asset acquisition and disposition• Operator performance and compliance reviews• Operational reviews• Business valuations• Asset enhancement and capital expenditure evaluation
ASSET MANAGEMENT
TRI CONSULTINGDEVELOPMENT SERVICES
REGIONAL DRIVERS AND FACTORSFACTORS IMPACTING TOURISM IN THE REGION
IRAN• Currency Depreciation,• New U.S. Sanctions
OMAN• Evolving Air Industry • New Muscat Terminal • Duqm Airport• New e-Visa Policy• New Short-Stay Visas (2018)
SAUDI ARABIA• Introduction of VAT• Evolving Entertainment Industry• Social Reforms• Planned Tourism Developments • Tourist Visas
TURKEY• Currency Depreciation • Political Conflicts• Safety Concerns
EGYPT• IMF-backed Economic Reforms• Rising Visitor Arrivals • Improved Tourism Revenues
BAHRAIN• New Oil Discovery• Infrastructure Development
UAE• Introduction of VAT• VOA – Russia & China• Transit Visas
LEBANON• Political Uncertainty• Economic Stagnation• Rising European Tourists• Declining GCC Visitors
KUWAIT• Project Delays• Evolving Air Industry• VAT delay– 2021• Government Bureaucracy
QATAR• GCC Diplomatic Issues• New Visa Waiver for 80 Countries (2017)• New Transit Visas • Rampant Development
Source: HotStats, August 2017 – July 2018
REGIONAL HOTEL PERFORMANCEREVPAR & GOPPAR
BEIRUTRevPAR: -47.4%GOPPAR: -43.8%
AMMANRevPAR: -4.3%
GOPPAR: -18.2%
JEDDAHRevPAR: -1.6%GOPPAR: 4.0%
RIYADHRevPAR: 4.0%
GOPPAR: 25.6%ABU DHABI
RevPAR: -1.0%GOPPAR: 2.0%
MUSCATRevPAR: -19.6%GOPPAR: -34.2%
DUBAIRevPAR: -4.8%GOPPAR: -8.7%
DOHARevPAR: -15.1%GOPPAR: -16.2%
MANAMARevPAR: -15.9%GOPPAR: -26.1%
KUWAITRevPAR: 5.6%GOPPAR: 3.4%
2.41million visitors
71%Occupancy
342ARR
214,600
6.9%
2.6Days (ALOS)
31,236Rooms of Supply
2.1%
196,600
135,200
94,700
71,300
5.1%
29,300 (15.8%)
31,400 (19.0%)
19,400 (25.8%)
13,500 (12.7%)
11,400 (17.4%)
2.0%
2.6%
UAE TOURISM OVERVIEWABU DHABI (YTD June 2018)
Top Source MarketsHighest Increase in
Arrivals Volume
7.0%
743,000
599,000
453,000
40,000 (9.6%)
32,000 (12.0%)
29,000 (18.0%)
UAE TOURISM OVERVIEWDUBAI (YTD June 2018)
8.1million visitors
77%Occupancy
501ARR
4.7%
3.6Days (ALOS)
111,317Rooms of Supply
0.5%
2. 0%
0.0%
Top Source MarketsHighest Increase in
Arrivals Volume
1,082,000
405,000
172,000 (74.0%)
31,000 (2.9%)
• HotStats is a hotel profit and lossbenchmarking tool, which allowsfor direct comparison with yourcompetition;
• Launched in the UK in 1997, thetool now covers more than 800,000hotel establishment rooms globally;
• Operations in the MENA regioncommenced in 2011;
• Consists of over 450 hotels acrossthe MENA region and over 1,500properties worldwide;
• Provides in excess of 100performance metric comparisonscovering 70 areas of hotel revenue,cost, profit.
HOTEL PROFITABILITY BENCHMARKINGHOTSTATS
KEY PERFORMANCE INDICATOR ABU DHABI Change (%) DUBAI Change (%)
ROOMS OCCUPANCY (%) 75.2 1.7 79.3 -0.8
AVERAGE ROOM RATE (AED) 476.7 -3.3 827.8 -3.9
ROOMS REVPAR (AED) 358.6 -1.0 656.7 -4.8
FOOD REVPAR (AED) 189.1 -4.0 256.4 -1.8
BEVERAGE REVPAR (AED) 69.0 -11.6 118.3 -5.3
TREVPAR (AED) 673.0 -2.7 1,129.3 -3.9
PAYROLL PERCENTAGE (%) 30.5 -0.9 25.3 1.1
GOPPAR (AED) 200.1 2.0 435.6 -8.7
GOP PERCENTAGE 29.7 1.3 38.6 -2.0
KEY PERFORMANCE INDICATORSABU DHABI & DUBAI
Source: HotStats, August 2017 – July 2018
450.0
475.0
500.0
525.0
550.0
575.0
600.0
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
De
c-1
5
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
De
c-1
7
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
ADR 36-MONTH TREND GRAPHABU DHABI
Source: HotStats, August 2015 – July 2018
ADR 36-MONTH TREND GRAPHDUBAI
Source: HotStats, August 2015 – July 2018
800.0
825.0
850.0
875.0
900.0
925.0
950.0
975.0
1000.0
1025.0
1050.0
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
De
c-1
5
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
De
c-1
7
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
21.5 27.1 6.0 21.0 12.0 12.5
2.4 2.5
1.0
-4.3
0.9
-2.4
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
BestAvailable
Rate(B.A.R.)
Corporate Conference Leisure Tours &Groups
Other
Market Segmentation (%)
494.2 476.0 519.7 464.3 411.0 511.9
-4.4 -4.6
-9.1
-6.3
3.5 3.9
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
0.0
100.0
200.0
300.0
400.0
500.0
600.0
BestAvailable
Rate(B.A.R.)
Corporate Conference Leisure Tours &Groups
Other
Average Rate / Segment (AED)
MARKET SEGMENTATIONABU DHABI
Source: HotStats, August 2017 – July 2018
873.3 613.7 691.5 1009.6 602.9 825.3
-14.3
-6.4-5.0
-0.4
1.9
4.5
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
BestAvailable
Rate(B.A.R.)
Corporate Conference Leisure Tours &Groups
Other
Average Rate / Segment (AED)
20.1 18.2 4.8 35.3 12.2 9.4
2.2
0.30.0
-1.5
-0.3-0.7
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
BestAvailable
Rate(B.A.R.)
Corporate Conference Leisure Tours &Groups
Other
Market Segmentation (%)
MARKET SEGMENTATIONDUBAI
Source: HotStats, August 2017 – July 2018
4.2% 3.6% 2.9%
6.4%
30.5% 29.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Admin &General
Sales &Marketing
POMEC Utility Costs Total HotelPayroll
GrossOperating
Profit
Undistributed Expenses
76.2%
36.9%
56.0% 58.6%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Rooms Food &Beverage
MOD & Others DepartmentalProfits
Departmental Profits
Rooms, 53.3%
Food, 28.1%
Beverage, 10.2%
MOD & Others,
8.4%
Revenue Mix (Aug 2017 – July 2018)
PROFIT AND LOSSABU DHABI
Source: HotStats, August 2017 – July 2018
• Rooms department generated onaverage 53.3% of total revenues,followed by Food and Beverage with38.3%;
• Revenue share claimed by the Roomsand MOD & Others departmentsincreased year-on-year, while shareclaimed by the Food and Beveragedepartment declined marginally;
• Overall departmental profits grew1.7% to 58.6% with MOD & Othersregistering highest year-on-yeargrowth of 9.4%;
• Rooms department profits increasedby 1.6% to 76.2%;
• Food and Beverage profits alsoincreased by 0.7% to 36.9%.
3.2% 3.2% 2.0%
6.9%
25.3%
38.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
Admin &General
Sales &Marketing
POMEC Utility Costs Total HotelPayroll
Gross OperatingProfit
Undistributed Expenses
78.0%
39.4%
60.4% 63.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Rooms Food &Beverage
MOD & Others DepartmentalProfits
Departmental Profits
Rooms, 58.2%
Food, 22.7%
Beverage, 10.5%
MOD & Others,
8.6%
Revenue Mix (Aug 2017 – July 2018)
PROFIT AND LOSSDUBAI
Source: HotStats, August 2017 – July 2018
• Rooms department generated onaverage 58.2% of total revenues,followed by Food and Beverage with33.2%;
• Revenue share claimed by the Rooms,Beverage and MOD & Othersdepartments declined year-on-year,while share claimed by the Fooddepartment increased by 0.5%;
• Overall departmental profits dropped1.1% to 63.0% with MOD & Othersregistering highest year-on-yeardecline of 3.0%;
• Rooms department profits droppedby 0.6% to 78.0%;
• Food and Beverage profits alsodecreased by 1.2% to 39.4%.
21,997
26,001
28,37429,760
30,602 30,574
33,61934,986
36,39137,525
38,786162
0
20
40
60
80
100
120
140
160
180
200
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Room Supply Hotel Establishments
80,41484,443
92,33398,333
102,845 107,431
126,195
145,378
165,574174,307
180,662
681
-50
50
150
250
350
450
550
650
750
850
950
5,000
25,000
45,000
65,000
85,000
105,000
125,000
145,000
165,000
185,000
205,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Room Supply Hotel Establishments
DUBAIABU DHABI
Room Supply 2012-22 CAGR: 8.4% Room Supply 2012-22 CAGR: 5.8%
MARKET OUTLOOKFUTURE SUPPLY
Source: TCA Abu Dhabi, Visit Dubai, DTCM, STR AM:PM
Source: STR AM:PM
ABU DHABI CITY EXISTING SUPPLYMARKET OUTLOOK
24 hotels6,984 rooms
ABU DHABI CITY FUTURE SUPPLYMARKET OUTLOOK
Luxury, 18.2%
Upper-Upscale,
34.9%
Upscale, 18.5%
Upper-Midscale,
15.6%
Midscale, 12.2%
Economy, 0.6%
Current Room Supply Breakdown by Category
Luxury, 21.1%
Upper-Upscale,
36.3%
Upscale, 17.8%
Upper-Midscale,
13.8%
Midscale, 10.5%
Economy, 0.5%
2022 Room Supply Breakdown by Category
-
3,000
6,000
9,000
12,000
15,000
Luxury Upper-Upscale Upscale Upper-Midscale Midscale Economy
Evolution of Room Supply by Category
Current end-2022
MARKET OUTLOOKABU DHABI – FUTURE SUPPLY BREAKDOWN
Source: STR AM:PM
• Abu Dhabi’s hotel room inventory willincrease by an estimated 24.1% by theend of 2022;
• Approximately 90.3% of future supplywill fall into the upscale-to-luxury classbracket;
• The highest growth in room inventorywill be witnessed across the luxurysegment (44.1%), followed by upper-upscale (28.9%) and upscale (19.7%);
• Supply of upper-midscale and midscalehotel rooms will grow 9.8% and 6.6%respectively, while no future supply ofeconomy hotel keys has beenannounced;
• Overall market share claimed byeconomy-to-upper-midscale hotelrooms will decrease on the back ofincreasing market share of upscale-to-luxury inventory.
Source: STR AM:PM
DUBAI EXISTING SUPPLYMARKET OUTLOOK
DUBAI FUTURE SUPPLY
263 hotels75,679 rooms
MARKET OUTLOOK
-
10,000
20,000
30,000
40,000
50,000
60,000
Luxury Upper-Upscale Upscale Upper-Midscale Midscale Economy
Evolution of Room Supply by Category
Current end-2022
Luxury, 20.1%
Upper-Upscale,
29.4%
Upscale, 24.0%
Upper-Midscale,
14.1%
Midscale, 9.1%
Economy, 3.3%
2022 Room Supply Breakdown by Category
Luxury, 19.6%
Upper-Upscale,
25.1%Upscale,
22.7%
Upper-Midscale,
15.6%
Midscale, 11.7%
Economy, 5.3%
Current Room Supply Breakdown by Category
MARKET OUTLOOKDUBAI – FUTURE SUPPLY BREAKDOWN
Source: STR AM:PM
• Dubai’s hotel room inventory will increase by an estimated 70.5% by the end of 2022;
• Approximately 81.7% of future supply will fall into the upscale-to-luxury class bracket;
• The highest growth in room inventory will be witnessed across the upper-upscale segment (102.6%), followed by upscale (82.5%) and luxury (77.7%);
• Supply of upper-midscale, midscale and economy hotel rooms will grow 57.0%, 34.4% and 9.2% respectively;
• Overall market share claimed by economy-to-upper-midscale hotel rooms will decrease on the back of increasing market share of upscale-to-luxury inventory.
MARKET OUTLOOKSUPPLY AND DEMAND FORECAST
Source: TRI, TCA Abu Dhabi, Visit Dubai, DTCM, STR AM:PM
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2015 2016 2017 2018 2019 2020 2021 2022
Abu Dhabi
Room Supply Room Nights Occupancy
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2015 2016 2017 2018 2019 2020 2021 2022
Dubai
Room Supply Room Nights Occupancy
• The estimated 10% growth in room supply in 2018 is likely to put some pressure on occupancy levels in the short term.
• The increased pressure will be more specifically in the five-star segment where the majority of the upcoming supply is positioned.
• Increasing room demand from Abu Dhabi’s top overseas source markets, facilitated by the opening of AUH’s new Midfield Terminal in 2019, and slowdown in future supply are likely to push up occupancy rates after 2019.
• ADR to continue to soften by 6 to 7% through 2018.
• Lower projected occupancy rates and ADR to put downward pressure on RevPAR in full-year 2018.
• Rising corporate demand on the back of rising oil prices and sustained growth in non-oil economic sectors.
• Forecast growth in leisure visitors due to the development of a number of leisure attractions and beachfront resorts, particularly on Saadiyat Island and Yas Island.
MARKET OUTLOOKABU DHABI
• Supply growth is forecast to outpace room demand growth in the run-up to the Expo in 2020
• This will result in a drop in occupancy rates, before reaching a period of stabilisation from 2020 onwards;
• Approximately 75,700 hotel establishment rooms are set to enter Dubai’s market by 2022, reflecting a 70.5% increase in room inventory;
• With about 82% of all future supply falling into the upscale-to-luxury class, the five and four star hotel segments are expected to witness greater competition;
• The sheer volume of new inventory is also anticipated to further reduce ADR and RevPAR indicators in 2018 and 2019 despite the projected increase in demand;
• Expansion of the midscale and economy segments (18.3% of future supply) will continue as the city diversifies its source markets and targets more price-sensitive visitors;
• Upcoming world class leisure attractions and introduction of transit visas and visas-on-arrival for Chinese and Russian travellers will help drive visitor growth.
MARKET OUTLOOKDUBAI
Christopher HewettDirectorMob: +971 50 345 [email protected]
TRI CONSULTINGP.O. BOX 31933Dubai, United Arab EmiratesTel: +971 4 345 4241Fax: +971 4 345 [email protected]
KEY CONTACTS
Top Related