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Wed 13 Apr 2011 07:07 PM

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GCC hotel room revenues to hit $22bn in 2012

Alpen Capital report says prospects for hospitality sector are bright, sees 11% annual growth

GCC hotel room revenues to hit $22bn in 2012
The Meydan Hotel is one of the most recent additions to Dubais tourism offering.

Hotel room revenues in the GCC hospitality sector are set to hit $22bn in 2012, rising to $27bn by 2015, Alpen Capital (ME) said on Wednesday.

The investment bank's new report said revenues would grow at a rate of 11% from 2010, with Saudi Arabia and UAE the two biggest markets in the region - with 89 percent share between them.

Alpen Capital said it saw revenue per available room (RevPAR) in the GCC stabilising at around $173 during 2012 to 2015.

Average daily rate (ADR) for the region is expected to firm up to $257, the report said, while occupancy rates will be around 67 percent for the same period.

The report added that in terms of the hotel rooms supply pipeline, Saudi Arabia led the way with 61 percent of the total pipeline, followed by UAE with 29 percent.

"There are several factors boosting the outlook of the GCC hospitality industry. 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," Alpen Capital said.

"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," it added.

The growing importance of sports tourism with the likes of the Dubai Desert Classic, Formula 1 in Abu Dhabi and Bahrain as well as Qatar winning the bid to host the 2022 World Cup will also have a positive impact on the industry, the report said.

Challenges facing the hotel industry would include thewave of political unrest across parts of the GCC region as well as the larger MENA region, it said, adding that an oversupply of hotel rooms might also have a negative effect.

Sameena Ahmad, managing director at Alpen Capital, said: "Our 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."

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