Middle East war: what hospitality professionals need to know
Summary
The ongoing US–Israel conflict with Iran is severely impacting the Middle East's hospitality industry, causing significant drops in tourism and business travel. Dubai, a major hub, saw drastic booking cancellations and shifted guest profiles. Alternative destinations like the Mediterranean are experiencing surges in occupancy and investment due to the perceived safety advantages.
Key Insights
- •Cyprus and Malta are seeing occupancy growth of 16 and 19 per cent year-over-year to date. Other mainland European nations are also seeing increased interest. Turkey and Egypt are also primed to benefit.
- •Oil accounts for 30 per cent of airlines’ operating costs, meaning ticket prices could jump by 25 per cent as firms pass expenses on to consumers.
- •Dubai announced a $272 million package to the tourism and hospitality industry. A tax on guests staying in Dubai hotels and hotel sales tax have been deferred for three months alongside other actions meant to free up cash flow for operators.
- •In the first 48 hours of the conflict, more than 5,000 flights were cancelled. 80,000 hotel reservations in Dubai were cancelled in the first week. Tourism spending was down $12 billion in the first 20 days.
Action Items
- ✓Consider diversifying your portfolio into different asset classes. Short-term rentals, aparthotels and other extended-stay properties are favored for providing flexibility.Effort: mediumImpact: medium
- ✓If your properties are in areas experiencing lower demand, review your pricing strategy to remain competitive and attract guests. Consider seasonal pricing adjustments and dynamic pricing tools.Effort: lowImpact: medium
- ✓If you are managing properties in the Middle East, evaluate your cancellation policies and communicate proactively with guests. Be prepared for fluctuations in bookings and travel restrictions.Effort: lowImpact: medium
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