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Tourism boom spurs surge in new Mideast hotel projects

The UAE has 87 projects and 22,831 rooms in the construction pipeline

Hotel construction projects in the Middle East have increased to 607 projects with 147,088 rooms at the close of second quarter of 2024, reflecting the vibrant growth of the tourism and hospitality sector in the UAE, Saudi Arabia and Egypt.

Hotel construction pipeline in the region has registered a marginal increase of 2.0 per cent in the second quarter of the year, compared to year-ago, with luxury and upscale chains comprising 77 per cent of total projects, Lodging Econometrics survey has revealed in a report.

The report, “Q2 2024 Middle East Hotel Construction Pipeline Trend Report,” said the UAE along with four other countries represent 94 per cent of the projects and 95 per cent of the rooms in the Middle East’s total pipeline.

While the UAE has 87 projects and 22,831 rooms in the construction pipeline, Saudi Arabia has the highest number of projects under way in Q2 at an all-time high of 320 projects and 79,756 rooms. Egypt also hit record highs in Q2 with 107 projects and 26,185 rooms. Oman has 28 projects with 5,009 rooms and Qatar has 27 projects and 6,482 rooms.

In the first half of 2024, 35 new hotels with 6,308 rooms opened in the Middle East. An additional 66 new hotels with 13,723 rooms are scheduled to open by year-end.

According to Lodging Econometrics, the new hotel openings are forecast to increase slightly in 2025 to 102 new hotels with 25,914 rooms, and further in 2026 with 121 new hotels and 24,766 rooms expected to open.

Cavendish Maxwell projected in its latest report that with around 15,000 new rooms expected by the end of 2027 Dubai’s hospitality sector is not only thriving but is also a vital component of the emirate’s economic diversification strategy. While the city’s position as a leading global tourism destination appears secure, the industry faces challenges such as rising construction costs and heightened competition, necessitating a focus on innovation and sustainability, said the report.

Lodging Econometrics’ report noted that nearly 300 projects with 80,867 rooms are currently under construction throughout the Middle East. Projects scheduled to start construction in the next 12 months have seen a significant rise, with 145 projects and 34,706 rooms, marking a 42 pc YOY increase in projects and a 45 pc increase in rooms.

The report says that projects in early planning at the close of the second quarter stand at 162 projects with 31,515 rooms.

According to the analysis, three chain scales dominated the Middle East’s total pipeline in the second quarter, accounting for 77 per cent of projects and 79 per cent of rooms.

Luxury chains lead in the region with 162 projects and 36,342 rooms, followed by the upscale chain scale with 158 projects with 42,956 rooms, and the upper upscale chain scale with 148 projects with 36,213 rooms.

In Dubai, the four-star category experienced the most significant growth compared to the previous year, with 436 new rooms delivered, marking a remarkable 216 per cent increase over H1 2023, according to the Cavendish Maxwell report.

The five-star segment also saw impressive gains, with 1,681 new rooms coming online, representing a 111 per cent rise. “Overall, high-end accommodations remain prevalent, with approximately 67 per cent of the inventory classified as luxury, upper upscale, or upscale as of June 2024. Midscale and economy hotels made up 27 per cent and 5.0 per cent of the inventory, respectively,” said the report.

The Lodging Econometrics report said the cities leading in project counts at Q2 are Saudi-capital Riyadh with 89 projects and 17,784 rooms, Jeddah with 58 projects and 12,248 rooms, and the Egyptian capital of Cairo with 39 projects and 8,789 rooms. Doha follows with 24 projects and 5,794 rooms and then Saudi Arabia’s Makkah with 22 projects and 14,353 rooms.