Mid-range expansion and upscale realignment are key opportunities for Middle East hospitality market

Mabrian’s latest hospitality market report concludes this will strengthen competitiveness in market

Mabrian’s latest hospitality market report concludes that strengthening mid-range offerings and realigning hotel experiences with global standards, particularly among upscale and luxury accommodation, is essential for boosting competitiveness in Middle East hotel market. 

Ahead of the Arabian Travel Market 2025 in Dubai, Mabrian - part of The Data Appeal Company - Almawave Group - has released a new hospitality-focused study uncovering critical insights across six leading Middle Eastern destinations. 

The analysis highlights three distinct hotel market scenarios—based on distribution, pricing, and satisfaction levels - calling for strategic development in mid-range accommodations and a realignment of guest expectations with hotel classifications, especially in top tier hotel categories, to unlock long-term growth and competitiveness.

The study, Beyond The Stars: Aligning Expectations And Experiences In Middle Eastern Hospitality, is the second part of a series of Middle East market insights Mabrian, the global travel intelligence platform, shares in the lead-up to the 32nd edition of Arabian Travel Market, aiming at fostering industry discussion on key trends shaping the industry in the region.

The report dives into the hospitality landscape in six key destinations in the Middle East United Arab Emirates, Saudi Arabia, Egypt, Jordan, Qatar and Oman, that represent 89.6% of the region’s total number of international visitors; using data intelligence to cross-analyse the distribution of hotel categories, prices’ outlook and satisfaction levels from nearby and long-haul source markets.

Three scenarios unveiling opportunities for development and growth

Data intelligence indicates that the hospitality landscape of these six countries share three specific scenarios, based on how accommodation traditional categories (3, 4, and 5 stars) and hotel scales are distributed, how expectations are set among potential source markets based on these classification strategies, and how this is influencing pricing and guests’ satisfaction.

In the first scenario, Egypt, the UAW, and Saudi Arabia exhibit a uniform distribution of 3-, 4-, and 5-star properties in equal proportions. 

This situation presents an opportunity to enhance what this study refers to as "bridge categories," which are hotel models that incorporate characteristics and attributes of the subsequent higher tier. 

The report demonstrates that optimising segments to balance pricing with travellers' expectations regarding lodging experiences will enhance overall hotel satisfaction and profitability. 

This approach will also attract international brands interested in expanding their presence beyond luxury and upscale hotels, thereby fostering the development of mid-range accommodations. 

Egypt serves as a notable illustration of the significant influence of expectations on perceived value, where competitive pricing correlates with consistently higher Hotel Satisfaction Index scores. 

In contrast, guest experiences in Saudi Arabia do not consistently align with the typically elevated price range, affecting perceived value.

In the second scenario, encompassing Oman and Jordan, a conventional distribution of hotel categories is evident, with 3-star establishments constituting the predominant proportion, approximately half of the properties. 

Both destinations possess a shared prospect in diversifying and refurbishing economy and midscale accommodations to attract a wider demographic of travellers, thereby fostering an increase in visitor volume. 

According to the study, the 4-star hotel offerings in Jordan present a substantial opportunity to increase profitability and guest satisfaction through a restructuring based on lifestyle, boutique, and signature lodging brands. 

Meanwhile, opportunities in Oman lie in repositioning and improving luxury and upper upscale hotels, to enhance visitor experiences and pricing, especially since 5-star accommodation prices in Oman are projected to decrease by 7.4% year-over-year for the next 6 months. 

This decline signals the need to strengthen and diversify Oman's high-end accommodation offerings and its international markets.

Qatar's unique hotel market, heavily weighted towards the premium end, with nearly 60% of hotel properties classified as 5-star, is the third scenario. 

By offering an extensive selection of 5-star accommodations, Qatar seeks to position itself as a premium destination with highly competitive pricing in its luxury segment compared to neighbouring countries. 

However, the report shows although Qatar sits in the higher price tier within the region - averaging over $200 per night - this remains below the average rates seen in Saudi Arabia ($299) and the UAE ($291). 

While Qatar has seen the highest year-over-year price increase for the next six months among all destinations analysed (+11.4%), this pricing strategy may deter hotel development and expansion by global brands.

Data insight demonstrates that, by reinforcing mid-range hotel categories and diversifying accommodation options in Qatar, the destination could reduce competitive pressure on 5-star hotels, allowing for higher rates and improved profitability while maintaining overall market competitiveness, a key goal considering that despite the availability and variety of 5-star accommodation in the destination, Qatar is not achieving higher Hotel Satisfaction Index (HSI) scores than its Middle Eastern competitors. 

According to Sonia Huerta, advisory director and senior vice president of Mabrian, "Hotel prices across the region remain highly competitive, presenting unique opportunities to drive arrivals either from independent travellers, or sourced by tour operators, travel agencies, and travel advisors.” 

"By offering a distinctive value proposition rooted in culture, heritage, nature, and outdoor experiences - while maintaining attractive price ranges - these Middle East countries can compete on their own terms directly with other leading international destinations.”

The in-depth analysis by Mabrian of the Middle East hospitality market identifies several priorities for Middle East destinations derived from data insights.

These include the necessity of realigning hotel categorisation and experiences with global standards to expand long-haul visitation, particularly important for luxury and upscale accommodation; the imperative to invest in upgrades and experiential innovation in 4- and 3-star hotels, which play a crucial role in growing arrivals; and the importance of tailoring hospitality services to ensure a balance between local character and international standards, thereby enhancing guest satisfaction.

“Increasing arrivals to GCC countries, reducing seasonality in Egypt and Jordan, and diversifying demand to ensure a steady flow of travellers year-round require strengthening mid-range hotel categories—both in availability and quality,” added Huerta.

“While the Middle East benefits from a well-developed and relatively affordable 5-star hotel infrastructure, that should keep up with a discerning travel demand in this segment, fostering sustainable growth in visitation necessitates a strong offering of high-quality 3- and 4-star hotels, presenting valuable opportunities for international hotel brands to enter the market."