A Dubai-based investment bank has predicted that room revenues in the hospitality industry across the GCC will hit $35.9 billion in 2018, up from $22.8 billion last year.
According to a report by Alpen Capital, this growth will be driven by mega events, the development of infrastructure, including airports, and investment by governments in tourism, among other factors.
The GCC Hospitality Industry report also predicts that average occupancy rates are likely to be in the range of 68 percent and 74 percent between 2013 and 2018, while average daily revenue (ADR) is likely to average between $225 and $263 during the same period.
"The GCC economies are well on their way to recovery from the global economic crisis. With the recent wins in mega events like the Qatar FIFA World Cup 2022 and the Dubai World Expo 2020, the region is gearing up for an increase in tourist arrivals,” said Alpen Capital Managing Director Sameena Ahmad.
“Due to the forecasted increase in demand, the sector is going through capacity expansion as well as increasing investment into infrastructure. The industry is expected to sustain this growth momentum supported by the regional governments' initiatives to grow the sector, international tourist arrivals, especially those from the Asian region, and growth in the MICE segment among other factors.”
According to the report, Saudi Arabia is expected to continue its dominance as the largest market in terms of revenues, followed by the UAE.
Sanjay Bhatia, managing director at Alpen Capital, explained how the growth of the hospitality sector was being fuelled by education, healthcare and MICE activities, with support from the aviation sector.
“The sector will continue to grow driven by factors such as the shift in global activity from the West to the East, increase in leisure travel, growing demand for serviced apartments, shift towards budget travel and quicker construction pipeline,” he added.
“Given positive growth trends as reflected across occupancy levels, revenue and EBITDA margins, valuations remain attractive and hence, we expect activities across M&A and private equity funding to accelerate.
“The industry does face some key challenges which include, maintaining demand beyond the planned mega events, competing with newer projects/ concepts and attracting skilled labour to the region. However, we feel that the growth of the sector will be driven by supportive policy initiatives undertaken by GCC governments to enhance infrastructure; thereby positively impacting the continued investor appetite for the region and tourism.”For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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