Hotel Chains Brace for Weak Peak Season as Middle East Recovery Stalls

Accor's Middle East RevPAR fell 3% in the third quarter, and the region's most exposed major hotel group now assumes a roughly 12% decline for the fourth quarter — the region's peak season — as Houthi attacks on Saudi Arabia prolong uncertainty and event cancellations weigh on demand.

The figure, disclosed on an October 22 earnings call, captures the position of the world's largest hotel groups: a third-quarter recovery from the collapse that followed the outbreak of the U.S.-Iran war, followed by guidance for renewed weakness precisely when the region earns most of its money.

The Middle East is a small slice of most chains' revenue but a larger part of their development pipelines. So far, the majors are holding to those plans.

Who carries the most risk?

Exposure varies sharply. The Middle East accounts for about 11% of Accor's global room revenue, with Saudi Arabia at about 5% and the UAE at roughly 4%. For IHG, the region represents roughly 5% of its business. For Marriott, it accounts for about 3% of open rooms and about 3% of global gross fees last year.

That makes Accor the clear outlier among its peers — and the most sensitive to a second weak peak season.

What did Q3 actually deliver?

The third quarter was a recovery quarter across the majors:

• Marriott's Middle East RevPAR improved to a 12% decline from a drop of more than 40% in Q2. The company expects a steeper fourth-quarter decline against tough comparisons.
• Wyndham improved to down 13% from down 45%.
• IHG's wider region landed broadly flat, but RevPAR was down 12% across the six Gulf countries.
• Hilton's Middle East and Africa RevPAR fell 5.6%; the company now expects a low double-digit decline for the region for the full year.
• Hyatt held RevPAR down only about 3%, as domestic travel offset a 40% drop in international inbound.

Accor's detail shows the split within the region. "Saudi and Egypt continued to perform well, and the UAE RevPAR improved materially from the second quarter," said Martine Gerow, group CFO, on the October 22 call. UAE RevPAR was down by just over 20%, and occupancy had returned to the mid-60s percent.

Takeaway: every major measured improvement in Q3, and every major still guides to a weaker Q4.

Where does the earnings hit land?

The damage is concentrated in owned and managed hotels and in fees, not in franchise economics or development.

Hilton CEO Chris Nassetta said owned hotels in the region will cut more than $20 million from earnings this year. Hyatt expects about $10 million less in full-year fees. For both, the region is a manageable drag on group-level results.

For sellers of travel, the more consequential signal is what has not happened: development has not stalled. IHG said it is aware of no project cancellations. Wyndham recently signed five new contracts across Saudi Arabia and the UAE.

The chains are treating the disruption as a cyclical shock, not a structural one — absorbing near-term fee and owned-hotel losses while continuing to add rooms to a region they still count on for long-term growth.

Takeaway: owners and operators are absorbing the earnings hit; pipelines and signings continue.

What happens in Q4?

The fourth quarter is the region's most important season, and most groups now expect it to be worse than Q3. Accor has taken a tougher view on Saudi Arabia as Houthi attacks intensify on Riyadh, building the roughly 12% RevPAR decline into its assumptions. Event cancellations in Saudi Arabia add further pressure on demand.

If the attacks continue through the peak window, the region's second consecutive weak high season will stretch from Gulf business travel into the events and inbound segments that hotel chains had counted on for their 2025 recovery.

How the majors' Q4 guidance holds up will depend less on demand fundamentals than on whether the security picture in Saudi Arabia stabilizes before the season closes.