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MENA Tourism and

September 2013
Hospitality Report
 Table of Contents

Contents

01. MENA Tourism Synopsis .............................................................................................. 1

02. Hospitality Market Update ........................................................................................ 2

03. Saudi Arabia Tourism Industry ................................................................................... 4

04. Tourism Theme: MICE Tourism ................................................................................... 6

05. MENA Hotel Pipeline and Expansions ...................................................................... 7

06. Trends in Hospitality and Tourism GCC.................................................................... 9

MENA Tourism and Hospitality Report – September 2013
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01
MENA Tourism Synopsis
Tourism in MENA is showing signs of recovery despite the Arab Spring and the
ongoing economic instability in Europe

MENA TOURISM & HOSPITALITY

In the recent past, the MENA tourism industry suffered due to the political crisis in the region.
Although growth has been uneven across countries in the region due to the Arab Spring, some
MENA countries are showing signs of recovery.

According to the United Nations World Tourism Organisation (UNWTO), international tourist
arrivals in the Middle East grew 13% y-o-y during the first half of 2013. The growth is expected to
continue in 2013 at 3–4%, slightly below 2012 levels.

During the first half of 2013, more than 5.5 million tourists arrived in Dubai, an 11.1% y-o-y
increase. The increase in tourist number can be ascribed to the various events (shopping
festivals) and the growth in MICE tourism

Egypt has been one of the highly affected countries in the region. The number of tourists
traveling to Egypt has dropped significantly in 2013: just 1 million tourists visited the country until
the end of August, an 80% y-o-y decline. However, Egypt's Ministry of Tourism is promoting the
sector domestically and internationally. The ministry has collaborated with Ministry of Civil
Aviation affiliates, such as Egypt Air, Egypt Express, and Smart Air, to offer special discounts to
stimulate domestic tourism.

In mid-2014, a unified visa for the six GCC countries is likely to be implemented. With the visa,
Arab and foreign tourists could visit the GCC countries. The single-entry visa would be valid for
a month, but multiple-entry visas could be issued for a year. The GCC visa is expected to boost
tourism, business, shopping, and economic activities in the member countries.

An increasing number of international tourists plan to visit the GGC region. Therefore, it is the
right time for GCC countries to take advantage of the substantial national investments in
infrastructure and human capital to begin the transformation of the tourism sector.

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02
Hospitality Market Update1
The hotel industry in MENA exhibited mixed performance in July 2013, with
occupancy rate declining 7.6 percentage points (pps) y-o-y to 49.0%. ADR increased
5.6% y-o-y to $147.82, while RevPAR decreased 8.6% y-o-y to $72.37

Occupancy Rate
In July 2013, Doha, Qatar, reported the largest increase in the hotel occupancy rate. The
occupancy rate in Doha increased 4.2 pps y-o-y to 48.2%. The rise in occupancy rate can be
ascribed to Qatar Tourism Authority’s (QTA) efforts to focus Qatar as a tourism destination, prior
to FIFA WC in 2023 and relaxation of foreign entry rules..

Cairo, Egypt, recorded the largest decrease in occupancy in July 2013. The rate fell 34.9 pps y-
o-y to 16.6% due to the recent overthrow of President Morsi and violent clashes between his
supporters and the opposition.

ADR
Jeddah, Saudi Arabia, reported the largest increase in ADR in the region, up 13.0% y-o-y to
$258.81 in July 2013. This increase can be ascribed to the continued growth in room demand as
the city is considered as a summer tourism destination for domestic tourists.

In July 2013, Beirut, Lebanon, recorded the largest decline in ADR in the region, down 20.2% y-
o-y to $157.0, as political instability in neighboring Syria continues to affect Lebanon’s tourism
industry.

RevPAR
In July 2013, Jeddah, Saudi Arabia, reported the largest increase in RevPAR, up 6.3% y-o-y to
$203.7. This increase in RevPAR is ascribed to robust growth in room demand that led to higher
occupancy rates and ADR.

Doha, Qatar, reported the second-largest increase in RevPAR, up 2.5% y-o-y to $83.96, on
higher occupancy rates.

Cairo, Egypt reported the largest decrease in RevPAR in the region, down 62.0% y-o-y to $16.68.
Continuing political unrest in the country have lowered tourist visits thus affecting both
occupancy and ADR, resulting in lower RevPAR.

1 STR Global Data, Middle East/Africa Hotel Sector Performance for July 2013

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Table 1: Statistics in Key MENA countries2

Occupancy ADR Occupancy ADR

May–Jul May–Jul May–Jul May–Jul
Country Jul 2013 Jul 2012 Jul 2013 Jul 2012 2013 2012 2013 2012
Egypt 35.8% 52.8% EGP366.2 EGP383.5 48.4% 50.2% EGP435.3 EGP382.2

Saudi Arabia 54.1% 64.9% SAR1,104.8 SAR817.8 60.7% 66.9% SAR822.4 SAR687.7
UAE 49.9% 59.6% AED536.5 AED552.0 65.9% 65.6% AED605.9 AED583.9

Denotes increase in parameter Denotes decrease in parameter

2 STR Global Data, Middle East/Africa Hotel Sector Performance for July 2013, Aranca Analysis

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MENA Tourism and Hospitality Report – September 2013
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03
Saudi Arabia Tourism
Industry3
Religious tourism and business tourism are the key growth drivers for the tourism
industry in Saudi Arabia

In terms of absolute contribution to GDP, Saudi Arabia’s travel & tourism sector ranked 33rd
worldwide in 2012. Around 17.4 million international tourists are expected to visit the
country in 2013 due to an anticipated growth in religious tourism and shopping events. This
influx of tourists is expected to generate SAR36.8 billion in revenues during the year. The
number of tourists visiting Saudi Arabia is estimated to increase at a CAGR of 2.0% to 21.3
million over 2013–23, with revenues totaling SAR60.9 billion in 2023. The expected rise in the
number of international tourists may be ascribed to an increase in the number of people
visiting religious destinations (Mecca and Medina together attracts more than 7 million of
visitiors annually) and the growth in international shopping centers. Moreover, the Supreme
Commission for Tourism and Antiquities SCTA, Saudi Arabia’s tourism body, has been
implementing numerous promotional programs for attracting local and inbound tourists to
experience shopping in Saudi Arabia.

The travel & tourism sector’s direct contribution to GDP is estimated to increase to SAR56.4
billion in 2013 (2.4% of GDP) from SAR52.1 billion in 2012 (2.3% of GDP). Thereafter, it is
projected to increase at a CAGR of 4.0% to SAR83.7 billion in 2023.

In 2012, Saudi Arabia recorded leisure travel spending of SAR47.5 billion, while business
travel spending reached SAR34.5 billion during the same year.Leisure travel spending is
expected to grow 7.9% y-o-y in 2013 to SAR51.2 billion and, thereafter, rise at a CAGR of
4.4% to SAR78.9 billion in 2023. Business travel spending is anticipated to rise 8.8% y-o-y in
2013 to SAR37.5 billion and, thereafter, increase at a CAGR of 3.5% to SAR52.8 billion in
2023.

Investments in the travel & tourism sector are estimated to grow 1.7% y-o-y to SAR21 billion
in 2013. Investments are expected to increase at a CAGR of 4.0% to SAR30.9 billion over
2013–23

A key driver of tourism in Saudi Arabia is religious tourism. Each year, millions of pilgrims
come to Saudi Arabia to visit Mecca and Medina. Business travel is another driver for the

3 WTTC, IMF, and Zawya News Report

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MENA Tourism and Hospitality Report – September 2013
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country’s tourism industry. Key cities that promote business tourism include Riyadh, Jeddah,
Dammam, Al Khobar, and Dhahran.

Saudi Arabia’s government continues to undertake numerous initiatives to boost tourism.

The country is set to develop a domestic tourist destination worth over $650 million amid
rising tourism in the kingdom. The Kingdom has also proposed the launch of a tourism
investment and development company, which would execute large tourism projects and
lure private developers and investors.

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MENA Tourism and Hospitality Report – September 2013
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04
Tourism Theme: MICE
Tourism4
Meetings, incentives, conferences, and exhibitions (MICE) are a key driver for the
MENA tourism sector. The MICE industry in the region is set to expand, as the region
continues to attract high-profile global events and acquires state-of-the-art
infrastructure.

In recent years, the Middle East, particularly the UAE, has received huge investments in the
meetings and events industry. Dubai continues to be the key MICE destination in the UAE,
followed by Abu Dhabi.

Demand for MICE space in Dubai hotels has increased significantly. Hotels in the region are
witnessing a rise in demand for MICE services from companies for their meetings, trainings,
and seminars. These hotels focus on offering meeting rooms and banquet halls equipped
with a variety of multi-purpose facilities, such as projectors, screens, sound systems, and Wi-
Fi services.

Abu Dhabi is another key MICE destination in the Middle East. In March 2013, Abu Dhabi
Tourism & Culture Authority (TCA) launched the Abu Dhabi Conventions Bureau (ADCB) to
boost the emirate's ranking in the world's top destinations for MICE by providing free and
non-biased assistance and support to professional convention, incentive, and exhibition
planners.

In 2012, the total number of events hosted at Abu Dhabi National Exhibition Centre
(ADNEC) grew to 360 from 232 the previous year, a 55% increase. Additionally, 17
conferences were held that attracted almost 25,000 participants. According to studies
commissioned by Abu Dhabi TCA and ADNEC, the direct economic impact of MICE
business events on Abu Dhabi is expected to grow at 7% per annum to AED5.1 billion
between 2013 and 2020.

Oman is also showing growth and is developing as a popular MICE destination. The Oman
Convention and Exhibition Centre is under construction and is due for completion in 2015.
The center, spread across 2 million square metres, would house a 10,000-seat auditorium
and four hotels with a total of 1,000 rooms.

4 Desk Research

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MENA Tourism and Hospitality Report – September 2013
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05
MENA Hotel Pipeline and
Expansions
The number of rooms in the hotel pipeline in MENA in July 2013 declined 5.5% y-o-y
to 118,535, while the number of hotels in the pipeline fell 2.0% y-o-y to 485. The
decline is mainly due to fewer projects in the UAE, partly offset by increased activity
in Saudi Arabia and Qatar

Hotel Construction Pipeline5

As of July 2013, the active hotel

development pipeline in MENA MENA Hotel Industry Snapshot: Active
comprised 485 hotels with Pipeline* in
MENA Region
118,535 rooms compared with
(as % of Total Pipeline and number of
491 hotels with 125,481 rooms in rooms)
July 2012.

Kuwait 1.2% (1,418)

In July 2013, Oman reported the
largest growth (59.9%) with 4,577 Jordan 2.5% (2,972)
rooms in the total active
pipeline. Oman 3.9% (4,577)

Other regions that reported Qatar 6.5% (7,671)

growth of more than 15% are

Saudi Arabia (56.8% with 31,518 Saudi Arabia 26.6% (31,518)
rooms), Qatar (48.7% with 7,671
rooms), the United Arab Emirates UAE 27.2% (32,261)
(33.2% with 32,261 rooms), Kuwait
(21.5% with 1,418 rooms), and Rest of MENA 32.1% (38,118)

Jordan (16.6% with 2,972 rooms)

Active pipeline includes projects in the 'In-

Construction,' 'Final Planning' and 'Planning' phases

5 STR Global News Release

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MENA Tourism and Hospitality Report – September 2013
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New Hotel Openings and Expansions6

Qatar-based Retaj Hotels and Hospitality announced plans to expand its footprint
overseas, especially in the GCC states, including the UAE and Saudi Arabia. The company
is working on plans to open hotels in Dubai and Saudi Arabia. Currently, the projects are in
the study and negotiation stages. Construction of these ventures is expected to begin in
2014.

The Ritz-Carlton Hotel Co is expected to build a world-class luxury hotel in Oman as part of
its global expansion plans, which would add 20 new hotels globally by 2016.

In September 2013, Hilton Hotels & Resorts announced the opening of Hilton Capital Grand
Abu Dhabi, following a refurbishment and rebranding programme. Hilton Capital Grand
Abu Dhabi is located close to Abu Dhabi International Airport and the city’s National
Exhibition Centre. The hotel offers corporate facilities such as a 700-capacity grand
ballroom, a 500-capacity function room, five large meeting rooms, two boardrooms, and a
complimentary business center. Additionally, it offers a spa with 15 treatment rooms, a
sauna, and a whirlpool; a 24-hour fitness center, and an indoor and outdoor pool.

6 Zawya News

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MENA Tourism and Hospitality Report – September 2013
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06
Trends in Hospitality and
Tourism GCC
Car rental
The GCC car rental and leasing sector is uniquely positioned to capitalize on the
growth in the tourism and hospitality sectors in the GCC. Increasing demand from
young nationals and a growing expatriate population are the key drivers

Key Statistics/Trends7

Saudi Arabia is a key car rental market in the GCC, with demand increasing among Saudi
and expatriate residents. The estimated value of the car rental and car leasing sectors in
Saudi Arabia is approximately SAR1.4 billion (45,000 vehicles) and SAR1 billion (40,000
vehicles), respectively.

The car leasing market holds the most potential, growing at around 20% per annum in
Saudi Arabia. Jeddah, Riyadh, and Dammam are key markets for car rental and leasing
services in the GCC. Rise in number of tourists, coupled with population growth have
increased demand for the car rental in the region.

The demand for car rentals increases significantly around a week before Eid. Ramadan,
the two Eids, and the summer holidays are peak seasons for car rentals in the Kingdom.
During the peak season, car rental rates and prices rise 30–40%.

Car rental companies offer several types and models of vehicles, including vans, GMCs,
and small cars. Renting a small car costs between SAR120 and SAR150 per day. GMCs,
which are family cars, cost between SAR150 and SAR300 a day. Luxury cars (such as those
from BMW, Mercedes, Lexus, and Jaguar), which are much more expensive, can be rented
for SAR1,500–2,000 per day.

UAE is another key car rental and leasing market in the region. According to Hanco, one of
Middle East's largest and fastest growing car rental and leasing companies, the car leasing
business in the UAE is estimated to be worth more than $545 million and is growing at over
5% per annum. No company dominates this sector: businesses hold no more than 15%

7
Zawya news reports, desk research

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MENA Tourism and Hospitality Report – September 2013
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market share each. This represents significant growth potential for companies operating in
this region.

Licensed car rental businesses in the region, however, are suffering as many unlicensed car
rental businesses, who operate from residential apartments or auto mechanic workshops,
lease them at very low prices.

Some customers do not return the cars on time or leave them on the outskirts of the city.
Some people simply disappear and do not pay the rental companies. Firms lose 25% of
their revenues due to these kinds of cases.

Major Brands/Expansion Plans8

In March 2013, Autorent, a leading car rental and leasing provider in the Middle East,
opened its 19th branch in Abu Dhabi, operating under the "Easy Drive Car Rental" name.
Along with corporate car leasing, Autorent provides operational lease, lease to own, car
rental, and limousine solutions to customers. Autorent operates seven offices in the UAE, six
offices in Oman, and three offices in Saudi Arabia.

Thrifty Car Rental of UAE, a franchisee of the Dollar Thrifty Automotive Group Inc. and one
of the largest car rental businesses in the UAE, opened its 12 th mall-based outlet in the
emirate in March 2013. The latest store, located at Al Ghurair Centre in Rigga Road, is
situated in the heart of Deira, making it an ideal location for tourists due to its proximity to
the Dubai Museum and Dubai Creek. The new outlet is the first of several branches that the
company intends to open in retail locations in 2013.

In May 2013, Al Futtaim Vehicle Rentals (AVR) entered Qatar with the introduction of a
combination of vehicle rental and tailored corporate leasing solutions. Building on the
strengths of Al Futtaim's regionally renowned automotive division, AVR offers an expansive
fleet of new and well-maintained vehicles. The company’s key clients include IKEA, Marks
& Spencer, Petrotec, Combat Trading, and QDVC.

In May 2013, Jeddah-based Hanco opened its first overseas office in the UAE, in Dubai
Marina. The launch of the Dubai office marks the start of Hanco's regional expansion into
GCC countries with another five office openings scheduled for later this year. Hanco
started its Dubai car rental and limousine services with 25 staff and 100 cars and, if
forecasted demand is realised, the company envisages an operation of up to 100
employees and 800 cars before the end of 2013.

In June 2013, The Hertz Corporation, a leading global general use car rental brand,
announced the appointment of new general sales agents (GSA) in Jordan and Lebanon;
this was in line with its plan to increase its outbound car rentals from the two countries to
more than 8,800 Hertz locations in 150 countries. The company has tied up with Eastern
Travel & Tours in Jordan and Nakhal in Lebanon, and would provide improved service and
support to the countries' travel trade professionals in making car rental bookings globally
for their customers. The company has appointed Discover the World Marketing as its new
general sales agent (GSA) in Saudi Arabia and Bahrain to increase outbound car rentals.

8 Zawya news reports, desk research

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Disclaimer:
This material is exclusive property of Aranca. The information, opinions, estimates
and forecasts contained in this report have been arrived at or obtained from
public sources believed to be reliable and in good faith. Aranca has not
independently verified these data, and makes no assertion as to its accuracy,
reliability or completeness. Aranca will not be held liable under any circumstances
for any direct or indirect loss or damage suffered as a result of the use of this
information. This newsletter is intended for the personal use of qualified users and
not for broader distribution. No part of this presentation may be used or shared,
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© 2013, ARANCA. All rights reserved.

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