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In view of the upcoming mega events, the UAE and Qatar have been preparing their hospitality and travel sectors for massive expansion. In 2010, when Qatar won the bid to host the FIFA World Cup 2022, it surprised the world. This was mostly due to the fact that Qatar is the smallest area to have been awarded a FIFA World Cup and what the world considered unfit to host an event of such magnitude.
Qatar, however, has made enormous efforts to overcome the challenges and prove to the world it is are more than capable to host one of the most massive events in the world. Hosting an event of this scale meant that Qatar needed to grow not just its travel and hospitality sectors but its economy as a whole.
In 2014, Qatar announced its National Tourism Sector Strategy 2030 to consolidate and strengthen its economy. The strategy included a range of policies, plans, programmes, and projects specifically designed to bolster its tourism sector. The key targets of the strategy included driving tourist traffic up to 7 million visitors annually, adding up to 62,000 rooms, creating 127,000 jobs, and doubling-up non-GCC arrivals to 64 percent by 2030. In addition, to offer more accommodation facilities and increase tourism, the Qatari government is also redeveloping its Doha Port to transform it into a full-time cruise terminal and the Hamad International Airport, which opened in 2014, is expected to double the size of its main terminal by 2020.
As such, Qatar needs to, and has to be able to, accommodate such large scale projects and developments and as a result have a strong pipeline of hotel projects.
Having said that, investors from within and across the region have kept an eye on the market and started looking at opportunities within all sectors, namely the hospitality. Sharing a similar ideology and thought process, Sheikh Faisal bin Qassim al Thani, chairman of Al Sawari Holding and Qatari Business Association, signed a joint venture agreement with myself and created Aiana Hotels & Resorts. Today, Aiana is a global hotel management company with the fabled Indian service ethos at its heart. Both he and myself shared a common vision of creating a brand that appeals to young professionals and global travellers and provide guests with unique and enriching experiences, as well as bringing the first Asian-inspired hotel to Qatar.
Although Qatar's hospitality sector revenue is slated to grow annually at 12.9 percent to $1.6 billion during 2015-2020, its key operating metrics may witness some pressure in the short-term but is expected to rebound in the long-term due to growing demand. A recent report by Alpen Capital showed overall occupancy rates are set to decline by 7.5 ppts (percentage points) during 2015-2020. However, the decline is expected to be steeper in 2016 and then drop moderately in years to 2020.
While all three performing metrics remain stressed and are expected to remain so for the short term while supply outstrips demand over the next six months, we expect a narrowing of the gap towards the end of 2017 with an increased demand from projects and events.
Aiana's first hospitality project in Doha, the Aiana Suites and Residences, is a 180-key hotel apartment located in the diplomatic area of West Bay. We remain confident of the serviced apartment sector as occupancies have traditionally been higher when compared to hotels in the Doha market with lower volatility during the low season between the months of June, July and August.
Another positive factor is the fact that in comparison to most other cities in the GCC, the demand segmentation for serviced apartments in Doha over 70 percent of the business is skewed towards longer term stays over 6 months wherein other markets 70 percent to 80 percent is under one month. This is mainly due to a shift in corporate demand in serviced apartments from business travel to short term assignments and projects. In addition, we believe there is scope for further development in the mid-market segment of hotels in Doha and will be announcing shortly our boutique brand to cater to this segment which we believe will help support the requirements for affordable stay options particularly during sport events.
Qatar remains an above average performer when it comes to revenue per available room (RevPAR) when compared to other medium sized hotel markets in the Middle East where the average RevPAR is $80 according to 2016 data provided by Colliers International.
(Amruda Nair is Joint Managing Director and CEO of Aiana Hotels & Resorts)
