UAE and Qatar drive the market growth

September 3, 2016

The GCC’s hospitality market is expected to be worth USD 36.7 billion by 2020, driven by strong growth in the UAE and Qatar, according to a new report by Aspen Capital investment bank.

 

 

In its GCC Hospitality Industry Report investment bank Alpen Capital forecast the regional market will grow at a compound annual growth rate of 7.6 percent from USD 25.6 billion in 2015. The forecast occupancy rates would grow three percent yearly, raising the overal figures to a 70 percent increase with ADR  increasing 1.4 percent annually.  

 

In the short-term the report detailed that operating metrics would remain under pressure, particularly in the UAE and Qatar. Despite this, both countries are expected to demonstrate the fastest annual growth during the period, at more than 10 percent, due to Expo 2020 and the 2022 FIFA World Cup. Other GCC nations, with the exception of Bahrain, are expected to average growth of between five and six percent.

 

Alpen also forecast that total regional room supply would grow four percent annually during the period, despite a 5.7 percent expansion in tourist arrivals each year.

 

Outside of mega events, the bank said key growth drivers would be the meetings, event and conferences market, with several convention centres under development in the region to attract international summits. Expansion works at the two holy mosques in Makkah and Madinah are also expected to boost the hospitably market in Saudi Arabia.

 

Key challenges for the regional industry are expected to be low oil prices impacting business sentiment and events, depreciation of currencies making Gulf travel more expensive, political instability in the wider Middle East and demand failing to match room supply putting pressure on occupancy and average daily rates.

Failure to attract a continuous flow of tourists before and after the mega events could also create an oversupply situation in Dubai and Doha, while more broadly the bank warned of a potential shortage of skilled personnel due to the number of properties opening.

 

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