Marrakech’s weak market still attracts luxury hotel investors

Despite strong performance in previous years, tourism in Marrakesh, Morocco, has yet to recover in 2015. While the first three quarters of 2014 looked promising, the market experienced a downturn in the last three months of the year because of increased ISIS activities and the negative perception of Islamic countries, according to “Marrakesh – 1001 Hotels,” a recent report from global consulting company, HVS.

ADR grew by 3.7 percent in 2014, but in the first quarter of 2015, tourism has not rebounded. Yet investor and operator interest remains strong in the region. Multiple luxury hotel brands have launched in Marrakesh in the past few years, and the city currently has more than 1,502 rooms in the pipeline with 2,000 rooms already open.

Recently opened luxury hotels in Marrakech include The Royal Palm by Beachcomber Hotels (2014) and the Mandarin Oriental (June 2015), while upcoming openings include The Oberoi (later this year), Armani Resort, Park Hyatt, W Hotels, and Ritz-Carlton -all between 2016 – 2018. Luxury hotel operators Taj and Morgan’s Delano have recently pulled out of Marrakech.

Although Morocco is one of the more stable countries in Africa, terrorist attacks, and the ebola epidemic have led to the cancellation and relocation of many public events and corporate congresses, even though Morocco was not affected by the virus.

There are several challenges for Marrakesh, including terrorist attacks in surrounding areas and few direct flights from key markets (market is dominated by low cost carriers), but the city continues to promote itself to the meetings, incentives, conferences, and exhibitions (MICE) market, grow its pipeline with many global luxury brands planning to enter the market, and develop itself as a destination through Vision 2020 and other programs.