The value of Beirut hotel rooms grew 38 percent last year, compared to 2017, according to the Hotel Valuation Index Middle East conducted by HVS, the global hotel consulting firm.
This growth is due to an improvement in Revenues per Available Room (RevPAR), and a four-percentage-point increase in the net operating profit margin, according to HVS, which reports on the annual percentage changes of typical four and five-star hotels.
Beirut hotel rooms were valued at $190,000 last year, while the average value per available room at hotels in the Middle East was $207,000 over the same period.
Beirut hotel rooms registered a five percent compound annual growth in value between 2015 and 2018. The value of each room dropped 50 percent in 2016 compared to 2015, and registered 66 percent growth in 2017 and 38 percent growth in 2018. Beirut and Cairo were the sole countries in the Middle East that registered growth in 2018.
HVS used several parameters to provide a valuation of the hotel rooms, including loan-to-value debt coverage ratios, and the Income Capitalization Approach to calculate the value of the hotels. HVS worked off a premise that a hotel’s asset value is derived from the income it can generate.
According to HVS, the country has been positioned as one of the Middle East’s strongest hospitality players. The political and social situation in neighboring countries has resulted in a decline in the market in the last five years. But since 2017, the market has recovered with strong demand among European countries.
HVS’s report indicated that there is a limited supply of new hotels in the market when compared to other major cities in the Middle East. Hotel values are forecast to grow further, due to the anticipated rise in tourist arrivals and the easing of the GCC travel ban.
The value of Beirut hotel rooms was ranked sixth among the hotel rooms of 14 cities in the Middle East. They were higher than the value of rooms in Madinah and Ras Al Khaimah, but lower than the value of hotel rooms in Makkah, Kuwait City, and Abu Dhabi.