MENA Hotel Market

Sentiment, April 2020

A Survey by Colliers International

As the COVID-19 outbreak evolved this past month, we

conducted a survey with our clients to get their perspective on
the current situation, how they have responded to the pandemic
and their thoughts on the market moving forward.

April 2020
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INTRODUCTION
COVID-19 is having an enormous impact Africa to to get their perspective on the
on the world economy, with the travel and current situation, how they have responded
April 2020 | MENA Hotel Market Sentiment

tourism sector being the hardest hit by the to the pandemic and their thoughts on the
Colliers International

fall-out from the pandemic. As governments market moving forward.

continue to introduce measures to slow the
spread of the virus and promote
safeguarding measures, hotel owners are
also taking precautions as travel comes to
a halt.
Colliers International surveyed hotel
investors in the Middle East and North
Exhibit 1 below highlights the respondents’
investment locations. The respondents hold
a range of hotel investments from city
hotels, beach/desert resorts to serviced
apartments.

Exhibit 1: Respondents’ Investment Locations

Survey participants are from more than 25 cities in MENA. The majority of
investments owned by Respondents are in Saudi Arabia, United Arab Emirates and
Egypt

Tunisia Jordan
2% Iraq 2% Qatar
2% 4%
9%
Egypt
Egypt
20%18% KSA Kuwait
KSA 4%
31%
30% UAE
35%
Oman
4%

Exhibit 2: Typology of Respondents

65% of participants own operational hotels. Others have hotels under development

65% 57% 48%

Own existing Have development plans Have hotels currently
hotels for future hotels under construction
MENA Hotel Market Sentiment, 2020: Colliers International Survey
 REACTIONS TO THE COVID-19 CRISIS

Following the spread of COVID-19 and subsequent travel bans impacting

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April 2020 | MENA Hotel Market Sentiment
international travel, Colliers International found that 79% of hotel owners have
decided to partially or fully close their hotels due to low occupancy rates. Some
properties in the region are being used for quarantine and healthcare related
purposes. Nearly 29% of respondents with operational hotels have seen this within
their properties.

Exhibit 3: How Hotel Owners with Existing Hotels are Responding

to the COVID-19 Pandemic
Salary reduction, layoffs, forced staff leaves, and full or partial closure of hotels were
the most common responses among hotel owners

Reduced staff and/or salaries 88%

Initiating staff leave 83%
Full or partial closure of hotel 79%
Suspend non-essential and renegotiating supplier contracts 75%
Negotiation with bank for payment holiday 58%
Insurance compensation 33%
Property to accommodate healthcare/quarantine 29%
No measures taken – “business as usual” 8%
Change of property to residential
4%

“79% of hotel owners have decided

to partially or fully close their hotels
due to low occupancy rates”
MENA Hotel Market Sentiment, 2020: Colliers International Survey
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When it comes to owners with hotels However, 35% of respondents have

under construction or with development reservations about proceeding with
plans underway, we found that 65% have development plans.
April 2020 | MENA Hotel Market Sentiment
Colliers International

no plans to scale back.

Exhibit 4: How Owners with Hotels Under Construction and

Development Plans are Responding to COVID-19
Majority of owners with hotels under construction will not stop development plans
during the COVID-19 outbreak

35% 65%

35% of owners will scale 65% of owners will not

back construction and scale back hotel
development in construction or
response to COVID-19 development

COOPERATION BETWEEN EXISTING HOTEL

OWNERS & OPERATORS
Exhibit 5: Cooperation between Hotel Owners and Operators
“Operators have been very cooperative”, was the most prevalent response among
existing hotel owners

The operator has been

40% very cooperative

The operator has been

35% generally understanding

Have not dealt much

25% with the operator

MENA Hotel Market Sentiment, 2020: Colliers International Survey

2020 OCCUPANCY & RECOVERY
Hotel occupancy for 2020 is expected to be severely affected as illustrated by the
approximate 30% drop in occupancy in the MEA region seen in March of this

Colliers International
April 2020 | MENA Hotel Market Sentiment
year, as reported by STR. Our research revealed that 39% of investors believe
that the occupancy for the full year 2020 will be between 21-40%, while 33%
believe that the occupancy will be between 41-60%, with regards to their
respective markets.

Exhibit 6: Expected Hotel Occupancy for Full-Year 2020

38% of hotel investors in MENA expect the hotel occupancy in their respective
market to be between 21 – 40% in 2020 (full year)

> 60% Occupancy 0-20% Occupancy

41-60% Occupancy 21-40% Occupancy

Exhibit 7: Expected Recovery Period after COVID-19

Most hotel investors remain hopeful for a relatively quick recovery period. 46% of
respondents expect the recovery to begin in Q4 2020

After 1st Quarter

3rd Quarter 2020
2021

1st Quarter 2021

4th Quarter 2020

MENA Hotel Market Sentiment, 2020: Colliers International Survey

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“54% of respondents expect the market to

take about 6 to 12 months (from the start of
April 2020 | MENA Hotel Market Sentiment
Colliers International

recovery), for the hotel market to return to

2019 occupancy levels.”
Exhibit 8: Length of Time Expected for Hotel Market to return to
2019 Occupancy
Majority of respondents expect the market to take about 6-12 months from the start
of recovery for the hotel market to return to 2019 occupancy levels

12-24 Months – 22%

Less than 6 months – 17%

6-12 months – 54% More than 24 Months – 7%

OUTLOOK
The majority of hotel owners and
investors have a positive outlook on the
future of the hospitality industry. Overall,
52% of respondents expect to see
development opportunities in the
medium term. 39% would like to focus
on refurbishment and property upgrades,
26% on acquisitions and 22% on
restructuring. Only 7% of the
respondents stated that they do not see
any opportunities in the medium term.
When it comes to expected changes to
the industry in the long term, over a
quarter of the respondents (26%) believe
that the market will get back to “business
as usual”, while the vast majority (74%)
agree that the industry must be better
prepared in the future for a similar type
of event by implementing better crisis
management planning.

MENA Hotel Market Sentiment, 2020: Colliers International Survey

Exhibit 9: Opportunities that investors will focus on in the medium
term (1-3 years)

Colliers International
April 2020 | MENA Hotel Market Sentiment
Development was the most common answer among respondents when it comes to
opportunities that investors will focus on in the medium term

52% 39% 26% 22% 15% 13% 7%

No Opportunities in
Property Upgrade

the medium-term
Refurbishment /

Sole Focus on
Reinsurance /

Current Asset
Development

Acquisition

Refinance

Exit / Sale

Exhibit 10: Changes Expected in the Long Term After COVID-19

A quarter of respondents (26%) believe that the market will get back to “business as
usual” in the long term. The majority of respondents (74%) agree that the industry
must be better prepared in the future for a similar type of event by implementing
better crisis management plans

Better crisis management

Focus on leaner operations / controlling costs

No Impact (Business as Usual)

Shorter booking lead times

Change in refund policies

Higher working capital revenues

Change of Operators

Government support

MENA Hotel Market Sentiment, 2020: Colliers International Survey

FOR MORE INFORMATION

Christopher Lund James Wrenn

Head of Hotels | MENA Region Senior Manager, Hotels | MENA Region
+971 55 899 6110 +971 55 736 6767
christopher.lund@colliers.com james.wrenn@colliers.com

Mercy Kiprotich
Analyst, Hotels | MENA Region
+971 52 645 2006
mercy.kiprotich@colliers.com