The Middle East: A Tough Year in '98.

A survey of 119 hotels in the Middle East by HVS International reveals the dimensions of a year labeled "disappointing" by analysts Seamus O'Loughlin and Gerard Greene. The statistics for 1998 (compared to 1997) are as follows: occupancy decreased by 5 percentage points, to 61 percent; average

rate held steady (at the US$97 level reported for 1997); and RevPAR, therefore, sank to its lowest level since the war-benighted year of 1991. In real terms, accounting for inflation, the 1998 RevPAR figure is actually below that of 1991. Still, the World Tourism Organization reported that the Middle East has seen more tourists, as receipts increased by 6.4 percent in 1998 (as compared to 1997).

Isolated bright spots appeared amid 1998's overall bleak picture, as nearly 60 percent of the citys in the HVS survey saw a drop in RevPAR. The greatest RevPAR growth from 1997 to 1998 was in Beirut's hotels, followed by those in Luxor and Muscat.

Hotel companies' response to the down market is to develop more properties. O'Loughlin and Greene report that all major hotel companies are expanding their portfolios in the Middle East. Holiday Inn is adding 15 hotels; Marriott, 14; and Inter-Continental, 12. With the addition of Inter-Continental, Bass will be the largest hotel operator in the region, with 43 properties and some 11,200 rooms. Egypt is the main location for many of the new developments, particularly in the Red Sea and Sinai resort areas. Dubai has also seen considerable supply increases.

Better in '99? Much of the hotel industry's agony in 1998 was a result of low oil prices that year. The situation has turned around in 1999, while inflation has remained generally benign (with the specific exceptions of Syria, at 16.5 percent from 1997 to 1998, and Yemen, 11.0 percent). Another positive sign is that some locales are actively promoting their tourism industries, including Dubai and Beirut. Also weighing in the balance is the peace process, which the HVS analysts suggest will "dictate the growth of the leisure sector in the region."