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UAE’s & Qatar’s hospitality sector to grow fastest in GCC in next 5 years, says report

August 2016

August 23, 2016 | 15:25 | Dubai

From 2015 to 2020, the hospitality markets of Qatar and the UAE are expected to demonstrate the fastest annualized growth of over 10%, owing mainly to tourism-related developments ahead of landmark events to be held in these countries. Bahrain is likely to deliver growth in line with the regional average backed by tourism promotion activities and recovery in oil prices. Rest of the GCC nations are likely to register growth in the range of 5% to 6%, below the regional average, according to a report on the GCC Hospitality Industry by Alpen Capital.

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The key operating metrics of the sector is expected to remain under pressure in the short-term, mainly in the UAE and Qatar, but is likely to rebound in the long-term supported by growing demand. According to Alpen Capital, the GCC hospitality market is expected to grow at a 7.6% CAGR from an estimated US$ 25.4 billion in 2015 to US$ 36.7 billion in 2020, despite a slowdown in 2016. However it is anticipated to recover in the long-term with upcoming events, robust fundamentals and government efforts, driving the continual rise in tourist arrivals and a robust pipeline of hotels and serviced apartments. During the forecast period, occupancy rates at hotels and serviced apartments are anticipated to grow by 3 percentage points (ppts) to 70% and Average Daily Rate (ADR) is likely to increase at a 1.4% annualized rate during the period. As a result, the aggregate Revenue Per Available Room (RevPAR) of hotels and serviced apartments in the GCC is projected to grow at a CAGR of 2.3% to US$ 133 by 2020.

Chart23082016-2Large-scale international events, upcoming tourist attractions, and a growing MICE market are likely to accelerate tourist arrivals to the GCC region. International tourist arrivals to the GCC are anticipated to grow by 5.7% annually in the five years to 2020. The hospitality industry in the UAE and Qatar are gearing up for expansion in anticipation of a huge inflow of tourists for the mega events namely – the World Expo 2020 to be hosted in Dubai and 2022 FIFA World Cup to be held in Qatar. Significant investments are being channeled into the development of tourism and hospitality related infrastructure to accommodate the expected visitor traffic and provide avenues of entertainment and sightseeing.

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