4.43 PM Thursday, 28 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:57 06:11 12:27 15:53 18:37 19:51
28 March 2024

GCC hotel revenues rising

Alpen expects occupancy in the Gulf hotels will average around 67 per cent during 2012-2015 (FILE)

Published
By Wam

The hospitality industry in the Gulf region is expected to see it revenue reaching close to Dh100 billion by 2015, according to a study released by Alpen Capital (ME) Limited.

The GCC Hospitality Industry estimated that room revenues for the GCC hotel industry for the years 2012, and 2015 will stand at approximately $22 billion (Dh80.74 billion) and $27bn (Dh99 billion) respectively growing at a rate of 11 per cent from 2010. Saudi Arabia and UAE are the two biggest markets in the region with 89 per cent share jointly.

Sameena Ahmad, Managing Director at Alpen Capital, said: "Outlook for the hospitality industry remains positive as the industry bears a strong correlation with the healthy GDP growth projected for the region and there are several strong growth drivers for the industry.”

Sanjay Vig, Managing Director at Alpen Capital, said the GCC hospitality industry has several investment merits as the travel and tourism industry is slowly grabbing the attention of potential investors.

“The growth in the sector is catalysed by several government initiatives in infrastructure projects, bids for global sports events, commitment to diversifying the economy and initiative to stimulate the private sector."

The report estimates that the GCC Hospitality Industry performance as measured by annualised Revenue Per Available room (RevPAR) will stabilise at around $173 during 2012 to 2015. Average daily rate (ADR) for the region will firm up to $257, while occupancy rates will be around 67 per cent for the same period. It is important to note that ADR and RevPAR in GCC are highest amongst global sub-regions.

The GCC hospitality industry is currently trading at a P/E of 15x average which makes it very attractive in comparison to its global peers.

In terms of hotel rooms supply pipeline, Saudi Arabia leads the way with 61 per cent of the pipeline, followed by UAE with 29 per cent. However in terms of rooms under construction, UAE leads with 62 per cent as of 2010 followed by Saudi Arabia at 16 per cent. The demand estimate is based on forecasts of increase in tourist arrivals and leisure and business spending for international and regional visitors.

There are several factors boosting the outlook of the GCC hospitality industry. The GCC region has had continued economic growth and a healthy GDP projected for the future from which the hospitality industry will benefit. The region has a strategic location making it attractive to tourists from UK, Europe and the GCC itself.

The theme/experience based offering in the GCC region will help in capturing the spending power of the high end segment of the "baby boomer" generation in the US and Europe. The expansion of the middle class of China and India is also expected to present exceptional opportunities for growth for the GCC hospitality sector. The increase in business travel within the GCC region will also help in boosting regional demand.

The growing importance of sports tourism with many sporting events such as the Dubai Desert Classic, Formula 1 Grand Prix being hosted in the region as well as Qatar winning the bid to host the 2022 World Cup will have a positive impact on the industry. Events based tourism as well as niche tourism offerings such as cultural and heritage tourism, and diving and wild-life oriented tourism will also help in promoting the industry. The GCC governments are very supportive of their free trade and encourage foreign direct investment (FDI) and globalization. The increase in investment in the aviation sectors by the GCC countries in order to become a global hub for passengers and cargo with an aim to link various growth markets is also a promising factor.