May 07, 2013--DUBAI -- Despite the economic challenges in Europe, hotel investment volumes in Europe, Middle East and Africa, or Emea, are expected to hold firm at $11 billion this year as positive signs emerge in the hospitality industry across the region, says a report.

According to an investment outlook 2013 report released by Jones Lang Lasalle, or JLL, at the Arabian Hotel investment Conference, hotel demand recovered impressively in the Middle East since the Arab Spring, led by hotels in Dubai, which recorded high occupancy levels, with revenue per available room, or RevPAR, moving towards its peak of 2008.

Although the economic situation in Europe will remain complex, several indicators give cause for optimism and could lead to an improvement in investor confidence in 2013,

"For 2013, we expect a further improvement in trading performance in the UAE on the back of continued growth in international arrivals. Dubai, the 'safe haven' of the region, is expected to achieve a further growth in RevPAR whereas hotels in Abu Dhabi will continue to recover from an oversupply situation," Gabriel Matar, head of hotels and hospitality for the Middle East and Africa at JLL, told

"The hotel investment outlook for UAE is good, probably the best in the region with a stable performance and all the right elements in place for growth and profitability."

He said average room rates continued to improve during the first quarter of 2013 due to a resurgence in occupancy and increased average daily rates, while RevPAR levels have also experienced a notable nine per cent increase on a citywide basis. "The occupancy level in Dubai is expected to hit 88 per cent this year, while in Abu Dhabi it will stay firm at 71 per cent," Matar said, adding that hotel profits will stand firm between 12-15 per cent annually.

"In 2012, Middle Eastern investors were one of the most active buyers of hotel real estate, acquiring assets with a total value of $1.7 billion about 15 per cent of total investment volumes in Emea. In 2013, we expect Middle Eastern investors predominantly from the UAE and Qatar, to remain one of the most active buyers of European hotel real estate," he added.

Matar also predicts that development activity in the Middle East will pace ahead with financing often provided by public funds. The region is expected to open 150 new hotels in 2013 with the majority opening in Saudi Arabia and the UAE.

Last year, global hotel transactions reached $31.8 billion, a five per cent decrease on 2011. For 2013 the industry is expecting a slight improvement to $33 billion, despite continued economic uncertainties, with activity supported by the primary investment markets of the US, UK, France, Germany, Japan and Australia. "Globally, hotel operating fundamentals are poised to remain strong in 2013, but regional variances will persist. We forecast global deal volume of $33 bilion in line with the most recent three-year average," Mark Wynee-Smith, global chief executive officer of the JLL Hotels & Hospitality Group.

"We expect that the global hotel investment market will be flush with equity capital that will support transactional activity," he added.

According to the JLL report, cross-border capital accounted for 30 per cent of global hotel investment in 2012, trending above the recent average and driven by strong outbound capital flows from Asia and the Middle East.

"Cash-rich UAE and Qatar investors, primarily HNWIs [high net worth individuals] and sovereign wealth funds, will remain key to diversify into upscale assets in core markets and are likely to place in excess of $100 million in equity in each of a number of major deals," the report said.

The report also said that trading performance in North Africa would further stabilise in 2013 as tourists return to countries such as Egypt, Morocco and Tunisia.

"Occupancy in Cairo will further recover, although room rates are likely to remain low due to very competitive market conditions. Dynamic growth in trading performance is also anticipated for sub-Saharan Africa, especially for growing tourist destination such as Tanzania and Kenya," it said.

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(c)2013 the Khaleej Times (Dubai, United Arab Emirates)

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