GCC hospitality to hit $40b by 2018

The MICE (Meeting, Incentives, Conferences and Exhibitions) segment has expanded significantly in the recent past. The number of international conferences in the Middle East has more than tripled in the last 10 years. — KT photo

Dubai: The GCC hospitality industry is poised to grow at an annual rate of 9.5 per cent to $35.9 billion by 2018 from $22.8 billion in 2013, driven by the region’s pro-business environment and increasing appeal to private sector and foreign investments, Alpen Capital said.

The average occupancy rates in GCC HOTELS are likely to be in the range of 68 per cent and 74 per cent between 2013 and 2018 while average daily rates, or ADR, is likely to be between $225 and $263 during the same period.

Hospitality projects due for completion in 2014 are valued at $8.6 billion compared to $3.7 billion in 2013, Alpen Capital said.

Upcoming mega events in Qatar and UAE are expected to be the key growth drivers for the hospitality industry in these countries, Alpen Capital said in its GCC Hospitality Industry report.

“Supported by stable oil prices and continuous government spending, especially on infrastructure upgrade and economic diversification, the resource-rich GCC region’s growth prospects remain favorable. GCC countries continue to maintain a pro-business environment with no or low corporate taxes, which has encouraged private sector investments including foreign investments,” it said. The region is set to host mega events such as 2020 World Expo in Dubai and 2022 FIFA World Cup in Qatar. These coupled with high-profile annual events such as Grand Prix in the UAE and Bahrain are expected to draw a large number of visitors, the report noted.

The reported observed that with state-of-the-art infrastructure facilities, the MICE (Meeting, Incentives, Conferences and Exhibitions) segment has expanded significantly in the recent past. The number of international conferences in the Middle East has more than tripled in the last 10 years.

Governments across GCC region are investing billions of dollars to enhance tourism related infrastructure. In addition, GCC countries are planning to introduce a unified visa that would allow tourists to use the visa issued by one GCC nation to visit all the others, just as a Schengen visa works for most of the European countries, Sameena Ahmad, Managing Director, Alpen Capital said. “We feel that the growth of the sector will be driven by supportive policy initiatives undertaken by GCC governments to enhance infrastructure; thereby positively impacting the continued investor appetite for the region and tourism,” said Sanjay Bhatia, Managing Director, Alpen Capital. GCC airports are expected to handle about 250 million passengers by 2020, it said quoting a study.

Asia has emerged as one of the biggest and fastest growing international tourist markets for GCC nations. Leisure travel in the region is picking up momentum. With $23 billion market size, the UAE is the largest market in the region while Qatar has recorded the highest growth in recent past. Many international hotels are entering as well as expanding in the region either independently or through collaboration with LOCAL HOTELS, said the report.

However, there is an oversupply concern, given the fact that some of the GCC countries are adding huge HOTEL capacities in the run up to the planned mega events.

Despite the recent reforms initiatives taken by the regional governments, many challenges remain for the foreign companies looking to set up business in GCC. These include investor protection concerns, punitive bankruptcy laws, continued ownership restrictions for certain sectors and thrust towards localisation of labor force. Despite these challenges, the GCC hospitality industry’s outlook remains promising, the report said.