UAE, Qatar hospitality markets to grow the fastest in the next four years

Alpen Capital forecasts a growth of over 10% annually until 2020 for these two countries

DUBAI: The hospitality markets of the UAE and Qatar are expected to grow the fastest in the Gulf region over the coming four years, driven by tourism-related developments, according to the latest report by Alpen Capital, an investment banking advisory firm.

Alpen Capital forecasts a growth of over 10 per cent annually until 2020 for these two countries’ hospitality sectors. The rest of the GCC (Gulf Cooperation Council) nations are likely to register a growth rate of between 5 and 6 per cent, below the regional average, as per the GCC Hospitality Industry report released on Tuesday.

Hospitality revenues in the UAE and Qatar are forecast to reach $9.8 billion and $1.6 billion respectively by 2020

The UAE is gearing up to host Expo 2020 in Dubai, a six-month trade fair that is expected to attract 25 million visitors, while Qatar will host the 2022 World Cup. Dubai aims to attract 20 million visitors per year by the time it hosts the expo. The development of tourist attractions, such as theme parks, in Dubai is expected to help increase tourism.

The GCC hospitality market is forecast to grow at a compound annual growth rate (CAGR) of 7.6 per cent to $36.7 billion in 2020, despite a slowdown in 2016, according to the report.

Large-scale international events, new tourist attractions, and an expanding MICE market are anticipated to boost tourist arrivals to the GCC region. International tourist arrivals to the region are anticipated to grow by 5.7 per cent annually between now and 2020.

Outlook for the region’s hospitality industry is strong, even though the drop in oil prices and currency depreciation is affecting demand, Sameena Ahmad, managing director at Alpen Capital, said in a statement.

“Government measures to bolster tourism activities in the region like encouraging private sector investments, building new attractions, expanding airport capacity, and increasing international promotion campaigns are providing impetus to the growth of the hospitality sector in the region. A thriving segment of meetings, incentives, conferences, and exhibitions (MICE), spate of technological advancements, and brisk development of midscale hotel properties are among the key factors elevating the appeal of the GCC hospitality sector,” she stated.

In the GCC, occupancy rates at hotels and serviced apartments are anticipated to grow by 3 percentage points to 70 per cent and average daily rate (ADR) is expected to increase at a 1.4 per cent annualised rate in the coming four years. This means that the aggregate revenue per available room (RevPAR) of hotels and serviced apartments in the GCC is likely to grow at a CAGR of 2.3 per cent to $133 by 2020.

Total room supply in the region is forecast to grow at a CAGR of 4 per cent, slower than 5.7 per cent increase in international tourist arrivals. If the GCC fails to attract a continuous flow of tourists before and after its major events, they will likely see an oversupply of hotel rooms, Alpen Capital warned.

Dubai expects to have an additional 57,000 rooms in hotels and hotel apartments by 2020, while Saudi Arabia has a pipeline of over 47,000 rooms, as per the report.

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