Sharjah’s sudden dip in hotel occupancy

Sharjah’s sudden dip in hotel occupancy
Figures for April 2019 showed a downtrend trend in performance
Published: 1 July 2019 - 11 a.m.
By: Ashley Williams

The Sharjah hotel market has remained consistent over the past five years after experiencing an average occupancy level of 73%.

However, latest figures from industry experts revealed a “downtrend trend” during Q1 2019.

Colliers International revealed that the hotels in Sharjah have been experiencing a slight drop in occupancy and ADR levels recently. In 2018, figures showed a 4.6% fall in occupancy among properties in the emirate compared to 2017, while the ADR fell by 2.2%, resulting in a 6.7% drop in RevPAR.

April 2019 figures from the experts showed a continuing downward trend in key performance indicators, which has led to an overall softening of its hospitality business.

Colliers International’s head of hotels for the MENA region Christopher Lund said the reason for a drop in market share was attributed to a number of factors.

“The dilution in market share may be attributed to aging supply, the increase of price-sensitivity from the major source markets and increased competition resulting in lower ADR from the neighbouring emirate of Dubai,” said Lund.

“The majority of Sharjah’s hospitality products are either locally branded or unbranded. The market performance generally follows a similar pattern to the neighbouring emirate of Dubai, as its demand sees a portion of spill over from Dubai due to the proximity of the two emirates.”

TRI Consulting’s consultant Yani Eftimov said as far as performance levels across selected Sharjah hotels are concerned, the increase in hotel supply and the sustained decline in rates in the neighbouring emirate of Dubai put downward pressure on hotel performance across Sharjah hotels.

“Occupancy rates dropped 4% from 75% in 2017 to 71% in 2018, while ARR declined by 1.3% from US$ 92.6m in 2017 to US$ 91.4m in 2018,” said Eftimov. “Declining average rates and occupancy rates compounded further GOP per available room which dropped from US$ 34.3m in 2017 to US$ 31.1m in 2018.”

Despite Sharjah’s difficult start to the year, there are high hopes for the market, according to Colliers International, describing the region’s hotel sector as a “bright mid-term future”.

“The Emirate is already well known for its arts and culture scene, and this is expected to further strengthen its position as a tourism destination in the coming years,” said Lund.

“Sharjah’s hospitality market is evolving, well supported by the efforts from government to build the emirate into ‘a family-oriented, cultural and sports destination’. The ongoing development of multiple large-scale family-oriented projects focused on eco and cultural tourism are indicative of the investor confidence in the government’s planned strategy for Sharjah as a destination.”

The Sharjah Commerce and Tourism Development Authority (SCTDA) is also trying to enhance tourism to the region by setting up a three-city roadshow through Europe in Budapest, Warsaw and Prague. The roadshow aims to highlight Sharjah’s main tourist attractions across three key markets in central Europe, which according to a statement, is the first time that the SCTDA has targeted such markets.

Barcelo Gulf, a partner of the Barcelo Hotel Group which owns Occidental Sharjah Grand Hotel, also tells Hotelier Middle East that there are other ways that Sharjah is boosting its tourism numbers within the region.
“The pipeline of attractions and cultural activities, retail outlets, F&B options, and the recently simplified visa processes for key tourist markets are some factors that will contribute to increased footfall to Sharjah,” said Barcelo Gulf’s vice president sales & marketing Ahmad Shaban.

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Barcelo Gulf's Occidental Sharjah Grand Hotel

Operator openings

Sharjah is expected to witness the opening of more than 3,600 branded keys by 2023, according to Colliers International.

The company revealed that some of the new operators entering the market included The Address Hotels & Resorts with 1087 keys, Jannah Hotels & Resorts, Minor Hotel Group with 233 keys, along with Shaza Hotels which was recently appointed to manage three desert retreats.

Other hotels include the GHM Hotels with the recently opened ‘Al Bait Sharjah’ and the imminent opening of the 100-key Chedi Khorfakkan, Al Jabal Resort.

Speaking exclusively to Hotelier Middle East, Al Bait Sharjah’s general manager Patrick Moukarzel said the resort brings to light Sharjah's legacy and thoughtful vision to revive the heritage and historic fabric of the region.

“Sharjah Commerce & Tourism Development Authority’s vision is to establish the Emirate of Sharjah as the ideal family destination and emerge as a vital contributor to the region’s economic, social, cultural and environmental initiatives,” said Moukarzel.

“Al Bait Sharjah is a dream project and a sentimental one too for both GHM and Shurooq. By combining the history of the UAE and Sharjah specifically, whilst incorporating GHM standards, we have successfully delivered the culture and traditions of the region to our guests in the most unadulterated form. Al Bait plays a key role in re-establishing Sharjah as the cultural hub of the UAE.”

Also speaking to Hotelier Middle East, Swiss-Belhotel International’s SVP for operations and development for the Middle East, Africa and India Laurent Voivenel said the company remained optimistic about the market in terms of new openings and Sharjah’s supply is growing in more internationally managed hotels.

“Swiss-Belhotel International is among the top hotel brands present in Sharjah and is well established to expand further and serve the varied market segments with 14 unique brands,” said Voivenel.

“We remain confident that Sharjah will continue to offer exciting opportunities for growth.”

Time Hotels revealed in April 2019 that Sharjah was among its expansion plans as it seeks to open five new hotels across the Middle East as it targets 35 properties by 2025.

According to the Time Hotel’s CEO Mohamed Awadalla, the hotel group will launch its TIME Express brand with the opening of a three-star property in Sharjah, during the third quarter of 2019, which comprises 55 keys.

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Time Hotel's Time Express brand

Future outlook

Although Sharjah has experienced a tricky Q1 performance, Colliers International is hopeful for the region and its reputation for arts and culture scene, as well as family-orientated focus on cultural tourism could further strengthen its position as a tourism destination in the coming years.

“With the entry of new hotels, brands and unique concepts, as well as the development of new demand generators, the Sharjah hotel market has a bright mid-term future,” said Lund.

“We also expect to see some of the aging hotels to undergo renovations, to keep up with the evolving market dynamics.”

Al Bait’s Sharjah’s Patrick Moukarzel believes the emirates primary aim of travel continues to hinge on travellers seeking to experience cultures not native to their own, while enjoying modern amenities.

“The current crop of sophisticated travellers are eager to explore the culture, scenic attractions of the destination [Sharjah], familiarise themselves with the region’s history and, gain more insight into its culinary traditions and quirks.”

However, Swiss-Belhotel’s Voivenel has predicted a “further drop” [in Sharjah] before the market stabilises and picks up again.

The Middle East’s hotel sector has given a mixed review of Sharjah’s outlook and time will only tell whether the region’s performance rebounds.

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