Is the bubble about to burst?

Has the Middle Eastern hospitality market reached saturation point?

Sarah Gain
Sarah Gain

Has the Middle Eastern hospitality market reached saturation point?

A report by global hotel sales and marketing company Great Hotels Organisation (GHO) has suggested that hotel supply could be set to overtake demand as soon as 2010, forcing the region's hotels and resorts - and, by extension, the F&B outlets that are a part of them - to try to attract more international guests.

For several years now, the Middle East's food and beverage market has enjoyed a period of sustained growth, in line with the region's hospitality and tourism boom. During last year, the hotel industry in the Middle East was the third fastest growing in the world, with Dubai continuing to perform well and Oman emerging as the region's strongest-growing market.

In turn, this rapid growth of the hospitality sector caused the region to emerge as a leading hotspot for restaurant and cafe investment.

But, according to GHO, the region's over-reliance on tourists from within the GCC could mean that the hospitality market as a whole could soon be heading for a downturn in business.

This boom-time saw a high demand for what was, until quite recently, a fairly limited selection of hospitality and foodservice facilities. However, the exceptional rate of hotel construction in the region means that an increasingly diverse F&B selection is becoming available on an almost weekly basis, causing intense competition.

Exacerbating the situation are the high inflation levels that exist in areas like Dubai, GHO adds, which risk forcing industry and commerce to host their corporate events outside the Middle Eastern region, in areas like the Far East, where the costs of conference and banqueting facilities are much lower.

This negative outlook does not have to become a reality, however, says GHO director of business development Debora Maloney.

"The key will be for [businesses] to act early to open themselves up to the international marketplace, so that any lost guests from the GCC countries can be replaced by international guests. This includes placing more emphasis on international MICE, corporate and leisure business," she explains.

By planning for the future now, foodservice operators should be able to protect themselves against disaster should the hospitality bubble eventually burst.

Sarah Gain is the editor of Caterer Middle East.

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