Hajj season boosts Middle East hotel demand in August

Manama skyline: The hotel sector has been under pressure due partly to the impact of low oil prices and geopolitical risks. (Shutterstock)
Updated 24 September 2018

Hajj season boosts Middle East hotel demand in August

  • Occupancy rates — a measure of the proportion of available rooms sold — in the region jumped to 63.4 percent from 62.1 percent
  • The average daily room rate — another key industry metric — increased 12.2 percent to reach close to $170 per night

LONDON: Demand for hotel rooms across the Middle East leapt last month providing welcome relief for an industry that has been grappling with an oversupply of hotel accommodation, new data showed.
Occupancy rates — a measure of the proportion of available rooms sold — in the region jumped to 63.4 percent from 62.1 percent, according to data provider STR’s research published on Sept. 24.
The average daily room rate — another key industry metric — increased 12.2 percent to reach close to $170 per night, while revenue per available room (RevPar) increased by 14.5 percent to reach $107.50.
The region’s hotel sector has been under pressure due partly to the impact of low oil prices and geopolitical risks, resulting in a slump in room revenue and occupancy as supply exceeded demand.
“It is true in the broader sense that we have been seeing a softening of market-wide RevPar levels in the hospitality sector across most major cities within the GCC countries,” said Ali Manzoor, partner, hospitality and leisure at property consultancy firm Knight Frank.
Analysts have blamed the year-on-year uptick in August on the earlier Hajj season and Eid Al-Adha holiday, rather than indicative of a change in outlook for the sector.
“The spike in occupancy levels in August was largely attributable to differences between the Gregorian and Hijri calendars,” Manzoor said.
This year, the pilgrimage period took place in August, helping to boost the industry’s performance that month. “It is therefore reasonable to expect hotels to underperform in the month of September in relation to last year,” he said.
Looking at data for the year-to-date, the UAE retains the highest occupancy rate in the Gulf region at 72.2 percent, though this represents a slight decline of 0.8 percent compared to the same time period last year, according to STR data.
Saudi Arabia’s occupancy levels stood at 58.1 percent year-to-date, marginally up by 0.2 percent on last year.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.