The GCC hospitality market will grow at an annual rate of 8.1 per cent to hit $28.3 billion by 2016 compared to $19.2 billion in 2011, owing to factors such as favourable economic conditions combined with infrastructure development, said a report.
Driven by its macro-economic fundamentals, the GCC region performed relatively better in the current economic crisis, stated Alpen Capital in its GCC Hospitality industry report which focuses on the key performance indicators of the GCC region’s hospitality industry, such as number of hotel rooms, its trends, challenges and the industry’s outlook over the next five years.
Government support helped tackle the economic turbulence, and public sector spending on infrastructure has driven the region’s economic growth. With the improvement in economic conditions, business and consumer sentiments are showing signs of revival, said the report.
This is likely to boost domestic as well as inter-regional tourism in the GCC region, which will contribute significantly to tourist arrivals. In addition, as economic conditions improve globally, international tourism is likely to increase from both emerging as well as developed markets, it added.
“The GCC hospitality sector is poised for a healthy growth owing to factors such as favourable economic conditions combined with infrastructure development, increased bids to host high profile global events and government support to the private sector,” remarked Sameena Ahmad, the managing director at Alpen Capital.
“All these factors have contributed to the steady increase in tourist arrivals which in turn has facilitated the growth of the hospitality industry in the region,” he added.
Sanjay Bhatia, the managing director at Alpen Capital said, “The GCC hospitality industry has been high on the investment radar of businesses given the macroeconomic trends and the rise in business/ leisure visitors to the region.”
“The industry has strong fundamentals and is beginning to realize its potential. Accordingly, we believe that the industry presents itself as an excellent opportunity for all stakeholders,” he added.
According to the report, the occupancy rates were expected to average around 67–73 per cent between 2012 and 2016.
As business and leisure tourism continues to grow and the up-scale hotel segment account for most of the demand for hotels, ADR is likely to average around $212–$247 between 2012 and 2016.
Saudi Arabia is expected to remain the largest GCC market in terms of revenues, followed by the UAE. Qatar is expected to be one of the fastest growing markets, driven by rising business tourism and leisure tourism as the country prepares itself for the FIFA World Cup 2022, and in order to achieve its 2030 national vision, the report stated.
Alpen Capital said tourist arrivals in the GCC were also increasing on emergence of the region as a preferred tourist hub due to varied offerings for tourists.
“These range from shopping festivals to annual sporting events to conferences and exhibitions attracting both leisure and business travelers,” he noted.