According to a recent report by Kuwait Financial Centre ‘Markaz’, estimated room revenue in the GCC hotel sector for the year 2011 stands at US$17.83 billion, and is expected to reach US$24.92 billion by 2016 at a Compound Annual Growth Rate (CAGR) of 6.93%.
The average occupancy rate for GCC is estimated to be 68% for the year 2012 and expected to reach an average occupancy of 73% by 2016.
The report analyses the hospitality industry’s supply-demand dynamics, estimates the current and potential market size, discusses the various investment opportunities while analyzing the major players involved. It also discusses the key drivers of growth, identifies existing and emerging trends and illustrates the challenges in hospitality industry.
The report says skewed supply of hotel rooms towards upscale and luxury segment is a key trend in the hotel industry. These hotels provide services including spa and gymnasium facilities for which the demand is on the rise. Also, some of the big international hotel chains are increasingly showing willingness to form tie-ups with local players and the latter are being recognized for their remarkable and novel services. Service apartments have grown in the GCC region with the rise of business travellers and expatriates who look for longer stays at reasonable prices.
The possibility of a negative shift in the socio-economic and political instability of countries in the Middle East could impact revenues of the region’s hospitality industry. Other issues like oversupply in countries like UAE, Qatar and some parts of Saudi Arabia affected the OR and ADR values in the region. The high employee turnover and the labor laws in the region are a cause of concern for the hoteliers. The rising cost of construction coupled with stringent lending policies is some of the other key challenges in the industry.