Included in this roundup of news from the MEA region: Mecca real estate slump; Egypt’s rebound; and more.
Each week, Hotel News Now features a news roundup from a different global region. Today’s compilation focuses on Middle East/Africa.
Stock slump indicates Mecca real estate slow down
A 40% year-to-date drop in the stock price of Mecca-based Jabal Omar Development Co is indicative of a slowdown in real estate investment in the holy city, according to a report from Bloomberg.
The news agency reports hotels have been “under pressure” in the Saudi Arabian city, although consultants with JLL believe “the sector could fare better in the second half during the peak season of hajj.”
“Real estate developers have underperformed peers and general markets in Saudi Arabia,” Harshjit Oza, VP of research at Shuaa Capital PSC, told Bloomberg. “Factors like a low oil price, rising financing costs and geopolitical risks are acting as a headwind to sector growth.”
Preliminary November data from HNN’s parent company STR also shows lagging performance in Jeddah, Saudi Arabia. For the month, occupancy was down 4.3% year over year to 43.9% with average daily rate down 10.1% to 624.69 Saudi Arabian riyals ($166.51) and revenue per available room down 14% to 274.35 riyals ($73.13).
Various factors play into Egyptian rebound
The hotel industry is enjoying a comeback at the moment after being marred by years of turmoil in the country and regulatory hurdles. One of the most positive changes, according to HNN’s Terence Baker, is easier flow of investment in and out of the country.
“It is possible to own properties 100%, and there are no restrictions for ROI, which was the main barrier,” said Karl Lerner, founder and chairman of Cairo-based hotel consultancy Impact.
While high interest rates remain an obstacle, a strong push for domestic travel bodes well for demand, Baker writes.
“Egyptians are not big fans of traveling internationally and often are prepared to pay more to stay in Egypt,” Ahmed Shalaby, founder, CEO and managing director of Cairo-based hotel and real estate management firm Tatweer Misr said. “There are no special domestic rates at hotels. Another opportunity is that only 7% of Egypt’s 1 million or so square miles of land is developed.
CityBlue sees midscale opportunity in Africa
Executives at CityBlue Hotels told HNN’s Baker they’re moving their headquarters from Dubai, United Arab Emirates, to Nairobi, Kenya, in the near future as part of the company’s plan to take advantage of a lack of midscale supply in sub-Saharan Africa.
With five hotels currently in Africa, CEO Jameel Verjee sees plenty of room for growth.
“Our ambition is to double in size every two years from 2019 to 2025,” he said. “We seek to do so while implementing strict standard operating procedures and remaining at the top of our digital game.”
Compiled by Sean McCracken.