GLOBAL REPORT—The Levant—which consists of Cyprus, Israel, Jordan, Lebanon, Palestine and Syria and part of southern Turkey—is a disparate region with disparate hotel performance, according to experts.
Individual country performance cannot be compared with that of their neighbors, experts said.
In terms of tourism, the three major players of this group have been Cyprus, Israel and Jordan, which all boast different mixes.
Cyprus, divided in two sections (Greek and Turkish), receives sun-seekers from Northern Europe. Israel attracts pilgrims but also vacationers to Tel Aviv, Jerusalem and the Red Sea port of Eilat. Jordan is famous for its archaeological wonder Petra, although most hotel business centers on its Dead Sea resorts.
Israel, Lebanon, Palestine and Syria have all suffered from conflict over the past 40 years, with the civil war in Syria remaining deadly and spilling into Turkey. The entire region has been affected by this conflict, if not directly then indirectly by generally reduced tourism numbers.
Jordan and Lebanon
Hala Matar Choufany, regional managing director of business advisory HVS Dubai, studies hotel performance in two of the countries of the Levant: Lebanon and Jordan.
She said Lebanon has been hurt more by political instability than has Jordan.
“Lebanon’s best year recently was 2010, just before the Arab Spring, when its visitors were predominantly Arabs from the Gulf Co-operation Council countries, with traffic coming through Syria,” Choufany said, “but since 2011 it has gone from worse to worse. (Its capital) Beirut is falling very short of its peak (occupancy), but its peak always only hovered around 60%.”
Beirut was one of the weakest cities in the region, with a business climate that has seen hotels shutting down floors, she said. Not surprisingly, additions to supply are limited.
“In the last two years, we have seen investor appetite diminishing or being close to none. Historically, major Gulf players were keen to expand in the area, but now there hardly is a market even for distressed properties,” Choufany said.
Lebanon also has been hit by travel warnings and cessation of direct flights, notably from Dubai, she said.
“The hotel industry here is bleeding, and there are no indicators of a healthy market, while at a macro level, the infrastructure is not there at the moment either,” Choufany said.
And Jordan is not faring much better, she said, with its capital Amman, reliant on corporate business, also performing poorly. Its Dead Sea properties fare better, but occupancy is seasonal.
Amman has seen some major project announcements such as the Abdali mixed-use project; Fairmont Amman (coming in 2016, pushed back from 2014); and St. Regis Amman (opening July 2016).
Choufany remains unconvinced.
“Is there strong demand to justify these developments? In my opinion, no,” she said.
Choufany’s comments on Jordan are backed up by data from STR Global, HNN’s sister company.
Occupancy in Jordan for year-to-date September 2014 was 57%, which is still below its five-year high watermark of 59.7% recorded in 2012. Revenue per available room year-to-date September increased 8.2% to 62.74 Jordanian dinars ($88.29), which is the highest recorded during the past five years.
In comparison, Jordan’s neighbor Israel reported occupancy for year-to-date September 2014 of 66.4%, below its five-year peak of 69.4% recorded in 2010. Its RevPAR increased 2.3% to 475.35 Israeli shekels ($124.66) over the same period, following flat growth the past two years.
Israel and Cyprus
The hotel industry is spluttering on in both Israel and Cyprus, the first having seen renewed conflict in 2014. Meanwhile Cyprus, with its emphasis on package holiday destinations, has suffered due to the drop in overall travel stemming from the last recession.
Kadir Doruhan, tourism coordinator at the London office of the Turkish Republic of North Cyprus, said Northern Cyprus—which essentially is cut off from Europe with all flights still coming from Turkey—has a golden opportunity to strategically develop its hotel industry.
“The strategy is for boutique hotels, which generates increased tourist spend. We have enough 5-star hotels, and we have seen the mistakes in developing too many all-inclusive resorts,” Doruhan said, hinting at what he perceives as mistakes in the Greek part of the island.
Israel is bubbling along slowly, with the usual picture there being steady tourism mostly to its religious sites interrupted by occasional blips due to conflict escalation. At the beginning of 2014, demand was forecasted to be strong, and if there was a problem it was that supply was not keeping up to pace.
Leslie Adler, director of Atlas Hotels, an Israeli chain that has all its 13 properties in the nation, again within the country, said that despite it being quiet in Israel, his company is bullish about the future of hospitality there
“Overall performance has dropped. I would say it is not particularly good at the moment, but domestic travel remains perfectly fine, and we have plans for a further four Israeli properties,” Adler said.
Other hotel companies appear to be thinking along Adler’s lines. For instance, on 17 November, Marriott International announced the new AC Hotel Herzliya, which will open in early 2016 just north of Tel Aviv.