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Thu 2 Aug 2007 12:00 AM

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Finding a niche

Qatar's tourism authority has developed a clear strategy to corner several specialty markets.

Last December the Qatari capital Doha hosted the biggest sporting event ever to be held in the Gulf. The fifteenth Asian Games, which were broadcast to over a billion people worldwide, are regarded by some as a success, but the hotel industry was not ready to handle the number of guests.

During the Asian Games we didn’t have enough rooms to accommodate people. Spectators couldn’t find places to stay and we rejected requests.

"During the Asian Games we didn't have enough rooms to accommodate people. Spectators couldn't find places to stay and we rejected too many requests," says executive assistant manager, sales and marketing, Sheraton Doha Hotel and Resort, Sherif Sabry.

Prior to the start of the games, the Doha Asian Games Organising Committee booked out all the rooms in the capital's 14 properties at an agreed rate, meaning that hotels lost potential revenue from customers prepared to pay a higher rate.

On top of this, several hotel projects, such as Sharq Village & Spa, the Millenium Hotel, and La Cigale Hotel were not finished on time and spectators were left searching in vain for accommodation.

However Qatar Tourism Authority [QTA] director general Jan Paul de Boer believes that the problems of last year are a distant memory.

"We had the delays last year, which were unfortunate, but we have overcome that now and I think all the projects have really been able to accelerate to make sure they open by the end of 2008," he says.

"Now the summer is upon us, which is always a slow period, but we're quite confident for the future given the increase in room numbers in Qatar over the last year or so."

This year has seen the 250-room Millenium Hotel and Ritz Carlton's 174-room Sharq Village & Spa come online.

According to a Deloitte Hotel Benchmark Survey, occupancy in Qatar has been 78.2% for the first six months of 2007, which is an increase of 0.8% on 2006. The average room rate has actually fallen from US $253 in 2006 to $243 in 2007.

Director of sales and marketing at the 172-room Mercure Grand Hotel, Doha, Gabriel Fernandez says: "There are more and more hotels opening in the country and this is becoming a general trend. Maybe two years back you could say that there weren't enough rooms to satisfy demand, but now there's definitely room for everybody. [But I'll admit] for the last two years we have had to refuse people, which was not good for growth."

The market

The QTA has now got a detailed plan for the future, and it's based on realistic expectations, de Boer says.

"Qatar is not a country where one would stay two weeks on holiday, and we are quite honest in that respect. It's a great location for three or four nights. If you are a leisure traveller you should combine it with one of the other Emirates or use it as a stop over for either east or west bound travel," he says.

The plan focuses on the country's strengths rather than trying to compete with Dubai, Abu Dhabi and Oman, and de Boer is clear about what markets will be able to flourish in Qatar. He admits that it is not a mass market destination, rather the QTA is trying to reposition it as an upmarket destination for certain market segments.

"We've been trying to position the country as a niche market destination for MICE business, and in that respect we are developing a major new international exhibition and convention centre at Education City, and also we will be upgrading the International Exhibition Centre next year, which means that we will be investing heavily in that particular market segment," he says.

Sheraton's Sabry says that this focus on niche markets has been to the detriment of leisure tourism.

"A few years ago we had some demand from the leisure market, but now we've had growth in corporate demand, over the past few years we've had to reject that market and replace it with the corporate market," he says.

The reason for this is that the corporate market offers much higher revenues than the leisure market, and the facilities provided by Sheraton reflect this.

The Sheraton Doha Hotel & Resort is well equipped to deal with the corporate market with the largest conferencing facility in the Middle East. The Al Dafna Convention Center offers 3300m² of space and is supported by 26 meeting rooms.

"We are focusing on corporate business at present, because the meetings facilities need to be utilised otherwise they are a waste of space. Occupancy is 68% and we closed last year with an overall occupancy of 71%," Sabry says.

"The number of hotel rooms is limited, but the government is trying to increase the number of hotels. If we can combine leisure, corporate and MICE then all the gaps will be filled in."

As well as the MICE market, de Boer highlights a number of other areas in which Qatar is strong, for example the stopover market, which has been boosted by the frequent addition of new routes by Qatar Airways.

"Another niche market in which we are quite successful is the sports market as a result of the Asian Games, which has been able to really put Qatar on the map. Also we do very well in the business segments, given the high rate of economic growth in the country due to the oil and gas exploration, and we are also looking at opening our Islamic art museum early next year, which will really give the destination a push," he says.

According to Mercure's Fernandez, "the key change at the moment - because the last three years have been good for the hotel industry - is that it will be the customers who will decide [who is successful] depending on the services and the product".

"All this time it was the hotel that could benefit from the demand, but now it will be the customers who will decide," he adds.

Due to this power shift, Qatar Tourism Authority is trying to improve the standards of the country's hotels by classifying all properties with an official governmental rating.

"We have worked on this for the last two years together with a German consultancy company and we've really looked at the qualitative and the quantative factors," says de Boer.

"We've looked at the hard factors, like the design, the layout of the hotel and the features, but it was important that we also looked at the quality aspect of the business as well - the service."
All the country's hotels have already been classified between one and five stars for the facilities that they offer and next year an inspection of the quality of the hotels will be carried out.

"Everyone has been qualified with bronze stars [for the facilities], but next year hotels will be able to get five silver stars or five gold stars, which means that if you, as a hotel, are very good at service delivery then you can have a four-star gold rating and a five-star bronze rating. We will be the first country that will be looking at service delivery and effectiveness," de Boer says.

This vision of Qatar as an up-market destination is shared by the whole industry, according to de Boer.

He points out that in comparison to other Gulf destinations like Dubai, which is expecting 15 million visitors by 2015, Qatar is looking at 1.6 million and that means there is a need for a different approach.

"We want to be seen as the Switzerland of the Middle East; without the mountains but with the reliability,"he says.

The goal for QTA in the immediate future is to regulate the tourism sector, says de Boer. "We've looked at licensing and classification; we've looked at the law and really building the foundation of the sector; now we've got the various stakeholders on board. Now that we have built the foundation, it's a good starting point for us to develop it as a quality destination for certain market segments."

Three years ago, Qatar had 3500 hotel rooms; it now has 7500 and will be developing another 10,000 rooms in the next five to eight years. According to de Boer by the year 2012 the country will offer 17,500 hotel rooms.

"If you look at the economic output and the prospects for the Middle East given by the Royal Tourism Organisation I think everyone will admit that it's a very healthy part of the world to invest in the hotel business," he says.

"If you look at the returns in our business [they are] quite good compared to Europe, and I also think that the forecast for Qatar is double-digit growth in the next five years, which means that will bring a lot of travel with it, meaning that hotels will be very successful."

The opening of Qatar's new airport will provide even more demand for hotel rooms, and Sheraton's Sherif Sabry believes it's the most important development for the industry.

"The first phase we expect to be completed in 2008, so more people will have access to the country and we will be ready with five or six big new hotels," he says.

Satisfying demand

Next year will see a number of large international hotel chains entering the Qatar market. These include W, with its first property in the Middle East, as well as Shangri-La, Rotana, Hilton International and Marriott, which will open two properties.

"Many major players will be setting up shop in Doha and obviously that is good for us because it will give us another marketing tool. These companies bring with them a tremendous marketing organisation for worldwide distribution," de Boer says.

The majority of these investments will be in and around Doha, but there are a number of other developments planned for other areas of the country. The Pearl is a 400-hectare man-made island east of the West Bay shoreline and 20km north of Doha's business and financial district. The island will include retail and residential facilities, as well as three five-star hotels with a capacity of 800 rooms. It is being developed by Qatar's United Development Company and construction will take place in four phases with a scheduled completion date of 2009.

The Lusail Real Estate Development is a 35km² mixed-use development planned for the West Bay area.

"We have commissioned studies [for other areas of the country] because we have some beautiful beaches, but at present there aren't any concrete plans," de Boer says. "If you look at how well the market has adapted - and all the new rooms that came online in the last year - then I'm very confident about the future."

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