Slow recovery predicted for regional tourism
Domestic tourism is propping up leisure hospitality in the short-term, but long-term recovery of international leisure and business travel will be a slow process
Global tourism came to a halt in March 2020 as countries around the world imposed lockdowns to curtail the spread of Covid-19, with international borders closed and airlines grounded.
The region has faced various challenges in recent years, following the oil price crash of 2014 and as a result of continued hotel supply growth. However, the difficulties have not been on the scale of those resulting from the Covid-19 pandemic, which has significantly accelerated declines in both room rates and hotel occupancy.
Despite improved performance in January and February, before the pandemic crisis, the Middle East’s average occupancy in the first quarter of 2020 slipped to 59 per cent, a 16.7 per cent fall from the same period the previous year.
Euromonitor data shared by senior research analyst Rabia Yasmeen during the Arabian Travel Market virtual event that was held on 16-19 May (ATM Vitrual), paints a bleak picture for tourism in 2020. The figure for global inbound arrivals is estimated to be 938 million in 2020; it was previously forecast to hit 1.5 billion, with the planned Tokyo Olympics and Expo 2020 Dubai expected to spur growth.
Even the 938 million figure could shift downwards, depending on when borders reopen and flights resume, and how successfully concerns about the safety of travel are managed.
Domestic tourism kick
There are tentative signs of recovery in the domestic market, however. In locations where lockdown has been lifted, ‘staycations’ and even ‘daycations’ have proved popular.
Data from US-headquartered STR, which provides market data on the hotel industry worldwide, reveals that during the weekend of Eid al-Fitr (23-24 May), key markets in the Middle East posted 85 per cent occupancy levels, and some properties in beach areas reached 70 per cent occupancy.
In locations where lockdown has been lifted, ‘staycations’ and even ‘daycations’ have proved popular
Ras al-Khaimah Tourism Development Authority’s CEO Raki Phillips says that in the last week of May, occupancies in the emirate’s hotels peaked at about 60 per cent. He notes: “We know that in the very short term, it has all been domestic.”
Emirates gounded more than 200 jets in response to the spread of Covid-19
Leisure versus business
Experts agree that leisure destinations are likely to recover more quickly than corporate destinations, and resorts with larger footprints – where social distancing is easier – are in greater demand. These trends in segment growth and in Covid-linked preferences are expected to continue in the short- to medium-term.
In early June, director-general of Dubai Tourism Helal Saeed Almarri said that once markets reopen, it is also important to consider the changes in booking patterns.
The meetings, incentives, conferences and exhibitions sector is expected to be the last to recover. However, authorities are taking steps to improve the segment’s future prospects
He said: “Some of the initial indications we are seeing suggest that some group travel is likely to reduce and there will be more individual travel, especially from places like China and Russia. That means a different way of working for tour operators and travel agents.”
The meetings, incentives, conferences and exhibitions (mice) sector is expected to be the last to recover. However, authorities are taking steps to improve the segment’s future prospects, despite the delay in a number of high-profile events.
For example, Dubai Customs has signed a cooperation agreement with Dubai Tourism to work together to organise annual joint forums, conferences and workshops. This follows a meeting of industry leaders held by the Dubai World Trade Centre authority to plan the revival of the city’s mice sector.
Aleph Hospitality founder and managing director Bani Haddad tells MEED that the revival of tourism remains a complex issue, and that the rebound will be gradual. He charts the phases of recovery as: domestic and regional travel first, followed by international leisure travel, then business travel, and finally mice travel.
“It will take time for confidence to come back. All players are deploying significant resources to ensure the safety of travellers and are conveying these safety assurances in the most transparent ways possible. Hotel companies are issuing their new hygiene protocols, with many of them establishing hygiene certifications. Airlines and destinations are doing a similar thing.”
He adds that it will be important for the hospitality and tourism industry to continue to show flexibility when it comes to cancellations and refund policies in the early stages of re-opening.
It will take time for confidence to come back. All players are deploying resources to ensure the safety of travellers and are conveying these safety assurances in the most transparent ways possible
Bani Haddad, Aleph Hospitality
Data from Euromonitor reveals that hotels took nearly a decade to recover from the effects of the 2008 recession. However, Yasmeen expects recovery will be quicker in the post-Covid world, predicting a recovery for hotels within four years and airlines within three.
Forecasts from Canada-based global commercial real estate services organisation Colliers International as of May 2020 show that in the short term, recovery is expected to start in the fourth quarter of 2020 and continue in 2021. Colliers International’s head of hotels for the Middle East and North Africa, Christopher Lund, predicts that after the summer period, although occupancies will not hit pre-Covid-19 highs, they will improve.
Commenting during ATM Virtual, he said: “For 2021, we expect that towards the second quarter onwards, the market will improve. We will still be below 2019 levels, but we will be closer.”