Qatar plans hotel growth as revenues and occupancies fall

With the 2022 FIFA World Cup six years away, Qatar is attracting interest from global hoteliers. But investors may have second thoughts about long-term feasibility given the latest hotel numbers from the country.

DTZ's second-quarter Qatar Market Report indicate that Qatar's hotel revenues fell 17.8 percent over the year through April, and that occupancy declined to 64 percent. In April 2015, occupancy was at 72 percent. During the same period, average daily rate declined 6.5 percent and revenue per available room fell 17.8 percent.

Figures from the Qatar Tourism Authority indicated that the number of hotels in Qatar reached 20,700 earlier this year, and DTZ’s report said that the capital city of Doha alone has 123 hotel and hotel apartment complexes, 88 percent of which can be categorized as either four-star or five-star. The country’s room supply has grown by nearly 5,000 rooms over the past 18 months.

Looking Ahead

When Qatar first bid for the games, it promised to build more than 55,000 rooms. Since winning its bid, Qatar has spent tens of billions of dollars on upgrading infrastructure, and has built "scores" of hotels and apartment complexes. Some projects, however, have faced major delays, including at least two hotels in Doha. As of January, authorities were predicting that 46,000 rooms would be ready for the World Cup.

Last month, BMI Research suggested that Qatar’s hotel scene would see new growth as international and domestic groups focus on the region. BMI noted that the value of the domestic hotel and restaurant industry will continue to rise over 2016, reaching $1.6 billion, a 5.4-percent rise over the year. By 2020, this will have risen to $2.2 billion, the Fitch Group company said in a recent report.

“The winning of the FIFA World Cup set to be held in 2022 in particular has increased interest in the country, with companies beginning to plan for developments to be ready by this time,” the report claimed. “Doha is currently the city being targeted most by developers, but as more tourists visit the city there is hope that tourism can be spread around the country more evenly.”

Qatar aims to increase overall annual tourist arrivals to 7 million by 2030.