GCC Hospitality Industry Set To Reach $35.9 Billion By 2018

The hospitality industry in GCC is forecast to grow from $22.8 billion (Dh83.7 billion) in 2013 to $35.9 billion by 2018 at an annual rater of 9.5 % according to a new report by investment bank, Alpen Capital.

The UAE’s Hospitality industry is expected to grow at a compound annual growth rate of 10 per cent between 2013 and 2018.

Average Hotel occupancy rates in GCC are expected to be between 68 percent and 74 per cent between 2013 and 2018, while the average daily rate (ADR) is likely to be between $225 and $263 during the same period.

The growth of the industry in the region will be fuelled by the shift in global activity from East to West, a rise in leisure travel, higher demand for serviced apartments, a shift towards budget travel and quicker construction pipeline, said Sanjay Bhatia, Managing director of Alpen Capital.

The sector’s growth is also expected to be driven by increase in international tourist arrivals, and a stronger MICE segment among others, said Sameena Ahmad, managing director of Alpen Capital in the Middle East.

According to the report, Saudi Arabia is expected to continue its dominance as the largest market in terms of revenue, followed by the UAE.    

The GCC has made major investments in the airport infrastructure, with Al Maktoum International at Dubai World is undergoing a Dh 117.5 billion which is expected to begin by end of the year. The airport will be able to serve 120 million passengers within six to eight year.

Airports across the region are expected to handle as many as 250 million passengers by 2020, according to Reed Exhibitions, quoting a study.

However, as the GCC countries are set to boost their hotel room capacity in the run up to major events, they also face the challenge of sustaining the demands after the events take place. The region has made major investments in infrastructure for events like World Expo 2020 in Dubai. The six month long Exhibition will be the main driver of the hospitality industry in UAE, which is valued at 23 billion dollars according to the report. However, in Dubai the hotel room supply and demand could be balanced after Expo 2020.

Other challenge faced by the GCC region is competing with newer projects and attracting skilled labor force.

Sanjay Bhatia, also said that, the growth of the sector will be driven by supportive policy initiatives undertaken by GCC governments to enhance infrastructure; there by positively impacting the continued investor appetite for the region and tourism.

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