Qatar’s hospitality sector still commands a very solid occupancy despite some challenges in 2016, Rotana chief operating officer Guy Hutchinson has said.
“It still commands good average daily rate, and we would not be opening four to six hotels if we did not have the ability to generate returns for our investors,” he explained on the sidelines of a GCC-wide Road Show last week in Doha.
Rotana is set to invest $250mn for two new properties in Doha in the next two years, bringing its total number of portfolios in the country to six.
But Hutchinson pointed out that some economic headwinds caused by regional and global trends slowed down growth in the hospitality industry in the months leading to 2017.
“While we expect some of the economic and geopolitical challenges in 2016 to spill over into 2017, overall, we feel the increase in supply will make the market more competitive this year,” Hutchinson noted.
“It will lead hospitality players to focus on innovation and resource optimisation while creating enhanced value for guests,” he felt.
While the industry is bracing for a possible region-wide reduction in room rates due to excess of demand, the COO believes that supply glut will be short-lived and the challenging environment will further infuse competition among the players.
Doha as a market went back 24% in early 2016 compared to 2017 in the same period due to a combination of additional hotels, economics, and oil price, according to Hutchinson.
“But despite of that decline we still trade at a very decent level,” he noted, citing revenue per available room as a measurement.
This year, Hutchinson expects a recovery due to Qatar government’s continuing efforts to diversify its economy. He sees initiatives such as the free transit visa to have a massive positive impact in the industry.
Summer, he stressed, is always difficult, and Ramadan is not a period the sector expects an increase. But he expects growth in the first quarter and the last four months of the year.
“If you look at 24% it might sound a lot, but when you look at what is happening around the world, Qatar is not alone. Paris went back 17%, on the same measure, and New York I think went back by 13% on the same measure,” he said.
“There has been some compression globally in the travel and tourism business.”
The official explained that even when the market went back by 24% in Qatar in 2016, Rotana opened a new hotel in the middle of the year and achieved 80% occupancy in three months.
“It tells you there is still significant demand and every market goes through peaks and thrust,” he said.
Citing STR’s Middle East/Africa November 2016 hotel pipeline, he said the last 12 months have witnessed an increase of 13% in room inventory in Qatar. A total of 19,648 rooms are under construction – spread between hotel, hotel apartment and service apartment variants.
Once complete, he said these rooms will add to the existing inventory of 47,062 rooms to take the total room supply in the country beyond the 66,000 mark.