HOTELIER MIDDLE EAST. General Manager Debate Market Presentation September Christopher Hewett Director TRI Consulting

Transcription

1 HOTELIER MIDDLE EAST General Manager Debate Market Presentation September 2018 Christopher Hewett Director TRI Consulting

2 TRI CONSULTING KEY FACTS 20 years Advising clients in the GCC, Middle East & Globally 1,300+ Assignments conducted across the region 30 Operational Reviews conducted since Years of combined experience in TRI s team of advisors 50 Countries covered in the Middle East, Europe, Asia and Africa

3 TRI CONSULTING DEVELOPMENT SERVICES STRATEGIC PLANNING Strategic planning is an essential component of the real estate development cycle. TRI Clients with strategic planning assistance in the following areas: Tourism master plans Sector reviews Identifying potential investment and/or conversion opportunities Rationalising existing property portfolio and branding Competitive benchmarking Custom market research Our involvement can range from providing a one time detailed review with recommendations to a bespoke engagement over an extended period. PROJECT DEVELOPMENT TRI provides development input for all phases of the development cycle but is particularly renowned for the preparation of independent and objective market and financial feasibility studies. These reports are prepared in a form suitable for presentation to traditional sources of finance and other relevant third parties, such as equity participants and hotel operators. Our services include: Market and financial feasibility studies Highest and best use studies Market studies Pre-feasibility studies Site analyses Financial analysis and cash flow modelling HOTEL MANAGEMENT CONTRACTS Over the past decade, the process of selecting and negotiating hotel management contracts with hotel companies across the Middle East has become more sophisticated, complicated and competitive. We understand management company branding, contract structure, major commercial terms and other owner and operator obligations. Our services include: Hotel operator search and selection MOU / LOI review and negotiation Hotel management agreement review and negotiation Technical service agreement review and negotiation Franchise agreement review and negotiation Hotel Rebranding ASSET MANAGEMENT TRI has been commissioned to provide consulting services for existing hotel, resorts and real estate projects. These services are typically commissioned in order to assist our clients with asset enhancement, increased cash flow and improved value. These services include: Advice on asset acquisition and disposition Operator performance and compliance reviews Operational reviews Business valuations Asset enhancement and capital expenditure evaluation

4 REGIONAL DRIVERS AND FACTORS FACTORS IMPACTING TOURISM IN THE REGION LEBANON Political Uncertainty Economic Stagnation Rising European Tourists Declining GCC Visitors EGYPT IMF-backed Economic Reforms Rising Visitor Arrivals Improved Tourism Revenues TURKEY Currency Depreciation Political Conflicts Safety Concerns KUWAIT Project Delays Evolving Air Industry VAT delay 2021 Government Bureaucracy BAHRAIN New Oil Discovery Infrastructure Development SAUDI ARABIA Introduction of VAT Evolving Entertainment Industry Social Reforms Planned Tourism Developments Tourist Visas IRAN Currency Depreciation, New U.S. Sanctions QATAR GCC Diplomatic Issues New Visa Waiver for 80 Countries (2017) New Transit Visas Rampant Development OMAN Evolving Air Industry New Muscat Terminal Duqm Airport New e-visa Policy New Short-Stay Visas (2018) UAE Introduction of VAT VOA Russia & China Transit Visas

5 REGIONAL HOTEL PERFORMANCE REVPAR & GOPPAR BEIRUT RevPAR: -47.4% GOPPAR: -43.8% AMMAN RevPAR: -4.3% GOPPAR: -18.2% KUWAIT RevPAR: 5.6% GOPPAR: 3.4% MANAMA RevPAR: -15.9% GOPPAR: -26.1% DOHA RevPAR: -15.1% GOPPAR: -16.2% DUBAI RevPAR: -4.8% GOPPAR: -8.7% JEDDAH RevPAR: -1.6% GOPPAR: 4.0% RIYADH RevPAR: 4.0% GOPPAR: 25.6% ABU DHABI RevPAR: -1.0% GOPPAR: 2.0% MUSCAT RevPAR: -19.6% GOPPAR: -34.2% Source: HotStats, August 2017 July 2018

6 UAE TOURISM OVERVIEW ABU DHABI (YTD June 2018) 2.41 million visitors 5.1% Top Source Markets Highest Increase in Arrivals Volume 71% Occupancy 342 ARR 2.0% 6.9% 214, , ,200 29,300 (15.8%) 31,400 (19.0%) 19,400 (25.8%) 2.6 Days (ALOS) 31,236 Rooms of Supply 2.6% 2.1% 94,700 71,300 13,500 (12.7%) 11,400 (17.4%)

7 UAE TOURISM OVERVIEW DUBAI (YTD June 2018) 8.1 million visitors 0.5% Top Source Markets Highest Increase in Arrivals Volume 77% Occupancy 501 ARR 2. 0% 4.7% 1,082, , , ,000 (74.0%) 40,000 (9.6%) 32,000 (12.0%) 3.6 Days (ALOS) 0.0% 111,317 Rooms of Supply 7.0% 453, ,000 29,000 (18.0%) 31,000 (2.9%)

8 HOTEL PROFITABILITY BENCHMARKING HOTSTATS HotStats is a hotel profit and loss benchmarking tool, which allows for direct comparison with your competition; Launched in the UK in 1997, the tool now covers more than 800,000 hotel establishment rooms globally; Operations in the MENA region commenced in 2011; Consists of over 450 hotels across the MENA region and over 1,500 properties worldwide; Provides in excess of 100 performance metric comparisons covering 70 areas of hotel revenue, cost, profit.

9 KEY PERFORMANCE INDICATORS ABU DHABI & DUBAI KEY PERFORMANCE INDICATOR ABU DHABI Change (%) DUBAI Change (%) ROOMS OCCUPANCY (%) AVERAGE ROOM RATE (AED) ROOMS REVPAR (AED) FOOD REVPAR (AED) BEVERAGE REVPAR (AED) TREVPAR (AED) , PAYROLL PERCENTAGE (%) GOPPAR (AED) GOP PERCENTAGE Source: HotStats, August 2017 July 2018

10 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 ADR 36-MONTH TREND GRAPH ABU DHABI Source: HotStats, August 2015 July 2018

11 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 ADR 36-MONTH TREND GRAPH DUBAI Source: HotStats, August 2015 July 2018

12 MARKET SEGMENTATION ABU DHABI Market Segmentation (%) Average Rate / Segment (AED) Best Available Rate (B.A.R.) Corporate Conference Leisure Tours & Groups Other Best Available Rate (B.A.R.) Corporate Conference Leisure Tours & Groups Other Source: HotStats, August 2017 July 2018

13 MARKET SEGMENTATION DUBAI Market Segmentation (%) Average Rate / Segment (AED) Best Available Rate (B.A.R.) Corporate Conference Leisure Tours & Groups Other Best Available Rate (B.A.R.) Corporate Conference Leisure Tours & Groups Other Source: HotStats, August 2017 July 2018

14 PROFIT AND LOSS ABU DHABI Rooms department generated on average 53.3% of total revenues, followed by Food and Beverage with 38.3%; Revenue Mix (Aug 2017 July 2018) MOD & Others, 8.4% 100.0% 80.0% 60.0% 76.2% Departmental Profits 56.0% 58.6% Revenue share claimed by the Rooms and MOD & Others departments increased year-on-year, while share claimed by the Food and Beverage department declined marginally; Beverage, 10.2% Food, 28.1% Rooms, 53.3% 40.0% 20.0% 0.0% Rooms 36.9% Food & Beverage MOD & Others Departmental Profits Overall departmental profits grew 1.7% to 58.6% with MOD & Others registering highest year-on-year growth of 9.4%; Rooms department profits increased by 1.6% to 76.2%; Food and Beverage profits also increased by 0.7% to 36.9%. 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 4.2% 3.6% 2.9% Admin & General Sales & Marketing Undistributed Expenses 6.4% POMEC Utility Costs Total Hotel Payroll 30.5% 29.7% Gross Operating Profit Source: HotStats, August 2017 July 2018

15 PROFIT AND LOSS DUBAI Rooms department generated on average 58.2% of total revenues, followed by Food and Beverage with 33.2%; Revenue Mix (Aug 2017 July 2018) MOD & Others, 8.6% 100.0% 80.0% 60.0% 78.0% Departmental Profits 60.4% 63.0% Revenue share claimed by the Rooms, Beverage and MOD & Others departments declined year-on-year, while share claimed by the Food department increased by 0.5%; Beverage, 10.5% Food, 22.7% Rooms, 58.2% 40.0% 20.0% 0.0% Rooms 39.4% Food & Beverage MOD & Others Departmental Profits Overall departmental profits dropped 1.1% to 63.0% with MOD & Others registering highest year-on-year decline of 3.0%; 45.0% 40.0% Undistributed Expenses 38.6% Rooms department profits dropped by 0.6% to 78.0%; 35.0% 30.0% 25.0% 25.3% Food and Beverage profits also decreased by 1.2% to 39.4%. 20.0% 15.0% 10.0% 5.0% 3.2% 3.2% 2.0% 6.9% 0.0% Admin & General Sales & Marketing POMEC Utility Costs Total Hotel Payroll Gross Operating Profit Source: HotStats, August 2017 July 2018

16 MARKET OUTLOOK FUTURE SUPPLY ABU DHABI DUBAI 45, , ,000 35,000 30,000 25,000 20,000 21,997 26, ,374 29,76030,602 30,574 38,786 37,525 36,391 34,986 33, , , , , ,000 85, , ,431 98,333 92,333 80,414 84, , , , , , , ,000 45, , , , , Room Supply Hotel Establishments Room Supply Hotel Establishments Room Supply CAGR: 5.8% Room Supply CAGR: 8.4% Source: TCA Abu Dhabi, Visit Dubai, DTCM, STR AM:PM

17 MARKET OUTLOOK ABU DHABI CITY EXISTING SUPPLY Source: STR AM:PM

18 MARKET OUTLOOK ABU DHABI CITY FUTURE SUPPLY 24 hotels 6,984 rooms

19 MARKET OUTLOOK ABU DHABI FUTURE SUPPLY BREAKDOWN Abu Dhabi s hotel room inventory will increase by an estimated 24.1% by the end of 2022; Approximately 90.3% of future supply will fall into the upscale-to-luxury class bracket; The highest growth in room inventory will be witnessed across the luxury segment (44.1%), followed by upperupscale (28.9%) and upscale (19.7%); Supply of upper-midscale and midscale hotel rooms will grow 9.8% and 6.6% respectively, while no future supply of economy hotel keys has been announced; Overall market share claimed by economy-to-upper-midscale hotel rooms will decrease on the back of increasing market share of upscale-toluxury inventory. Current Room Supply Breakdown by Category Midscale, 12.2% Upper- Midscale, 15.6% Upscale, 18.5% 15,000 12,000 9,000 6,000 3,000 - Economy, 0.6% Luxury, 18.2% Upper- Upscale, 34.9% Upper- Midscale, 13.8% 2022 Room Supply Breakdown by Category Midscale, 10.5% Upscale, 17.8% Evolution of Room Supply by Category Economy, 0.5% Luxury Upper-Upscale Upscale Upper-Midscale Midscale Economy Luxury, 21.1% Upper- Upscale, 36.3% Source: STR AM:PM Current end-2022

20 MARKET OUTLOOK DUBAI EXISTING SUPPLY Source: STR AM:PM

21 MARKET OUTLOOK DUBAI FUTURE SUPPLY 263 hotels 75,679 rooms

22 MARKET OUTLOOK DUBAI FUTURE SUPPLY BREAKDOWN Dubai s hotel room inventory will increase by an estimated 70.5% by the end of 2022; Approximately 81.7% of future supply will fall into the upscale-to-luxury class bracket; The highest growth in room inventory will be witnessed across the upperupscale segment (102.6%), followed by upscale (82.5%) and luxury (77.7%); Supply of upper-midscale, midscale and economy hotel rooms will grow 57.0%, 34.4% and 9.2% respectively; Overall market share claimed by economy-to-upper-midscale hotel rooms will decrease on the back of increasing market share of upscale-toluxury inventory. Upper- Midscale, 15.6% Current Room Supply Breakdown by Category Midscale, 11.7% Upscale, 22.7% 60,000 50,000 40,000 30,000 20,000 Economy, 5.3% Luxury, 19.6% Upper- Upscale, 25.1% Upper- Midscale, 14.1% Midscale, 9.1% Upscale, 24.0% Evolution of Room Supply by Category 2022 Room Supply Breakdown by Category Economy, 3.3% Luxury, 20.1% Upper- Upscale, 29.4% 10,000 - Luxury Upper-Upscale Upscale Upper-Midscale Midscale Economy Current end-2022 Source: STR AM:PM

23 MARKET OUTLOOK SUPPLY AND DEMAND FORECAST Abu Dhabi Dubai 45, % 200, % 40, % 180, % 35, % 160, % 30,000 25,000 20,000 15, % 60.0% 50.0% 40.0% 30.0% 140, , ,000 80,000 60, % 60.0% 50.0% 40.0% 30.0% 10, % 40, % 5, % 20, % % % Room Supply Room Nights Occupancy Room Supply Room Nights Occupancy Source: TRI, TCA Abu Dhabi, Visit Dubai, DTCM, STR AM:PM

24 MARKET OUTLOOK ABU DHABI The estimated 10% growth in room supply in 2018 is likely to put some pressure on occupancy levels in the short term. The increased pressure will be more specifically in the five-star segment where the majority of the upcoming supply is positioned. Increasing room demand from Abu Dhabi s top overseas source markets, facilitated by the opening of AUH s new Midfield Terminal in 2019, and slowdown in future supply are likely to push up occupancy rates after ADR to continue to soften by 6 to 7% through Lower projected occupancy rates and ADR to put downward pressure on RevPAR in full-year Rising corporate demand on the back of rising oil prices and sustained growth in non-oil economic sectors. Forecast growth in leisure visitors due to the development of a number of leisure attractions and beachfront resorts, particularly on Saadiyat Island and Yas Island.

25 MARKET OUTLOOK DUBAI Supply growth is forecast to outpace room demand growth in the run-up to the Expo in 2020 This will result in a drop in occupancy rates, before reaching a period of stabilisation from 2020 onwards; Approximately 75,700 hotel establishment rooms are set to enter Dubai s market by 2022, reflecting a 70.5% increase in room inventory; With about 82% of all future supply falling into the upscale-toluxury class, the five and four star hotel segments are expected to witness greater competition; The sheer volume of new inventory is also anticipated to further reduce ADR and RevPAR indicators in 2018 and 2019 despite the projected increase in demand; Expansion of the midscale and economy segments (18.3% of future supply) will continue as the city diversifies its source markets and targets more price-sensitive visitors; Upcoming world class leisure attractions and introduction of transit visas and visas-on-arrival for Chinese and Russian travellers will help drive visitor growth.

26 TRI CONSULTING P.O. BOX Dubai, United Arab Emirates Tel: Fax: info@trimideast.com KEY CONTACTS Christopher Hewett Director Mob: christopher.hewett@trimideast.com