 |
| Sameena Ahmad |
The Gulf Co-operation Council (GCC) hospitality sector is set to witness robust growth with the room revenues expected to touch $22bn by next year and $27bn by 2015, despite political unrest and uncertainty across parts of the region, according to Alpen Capital (ME).
The GCC hospitality industry performance, as measured by annualised revenue per available room (RevPAR) will stabilise at around $173 during 2012 to 2015, Alpen Capital said in its latest report.
The average daily rate (ADR) for the region will firm up to $257, while occupancy rates will be around 67% for the same period, it said, highlighting that ADR and RevPAR in GCC are highest among global sub-regions.
The GCC hospitality industry is currently trading at a P/E of 15x average which makes it very attractive in comparison to its global peers, according to the report.
“Our report studies the hospitality sector in the GCC with a focus on the hotel industry room availability and room revenues, its growth, performance and outlook for the next few years”, said Sameena Ahmad, managing director at Alpen Capital .
Alpen Capital has projected the outlook of the GCC hospitality industry based on supply and demand side factors. The supply side factors include, the total number of rooms expected to be added in the next four to five years and those under development.
In terms of hotel rooms supply pipeline, Saudi Arabia leads the way with 61% of the pipeline, followed by UAE with 29%. However in terms of rooms under construction, UAE leads with 62% as of 2010 followed by Saudi Arabia at 16%.
The demand estimate is based on forecasts of increase in tourist arrivals and leisure, and business spending for international and regional visitors.
On the growth drivers, it said there were several factors boosting the outlook of the GCC hospitality industry.
“The GCC region has had continued economic growth and a healthy GDP projected for the future from which the hospitality industry will benefit,” it said, adding the region has a strategic location making it attractive to tourists from UK, Europe and the GCC itself.
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. 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, according to the report.
“The growing importance of sport tourism with many sporting events such as the Dubai Desert Classic, Formula 1 Grand Prix being hosted in the region as well as Qatar winning the bid to host the 2022 World Cup will have a positive impact on the industry,” Alpen Capital said.
“The GCC governments are very supportive of their free trade and encourage foreign direct investment and globalisation,” it said, adding the increase in investment in the aviation sectors by the GCC countries in order to become a global hub for passengers and cargo, with an aim to link various growth markets is also a promising factor.
On the challenges, it said one of the main factors impacting the industry is the wave of political unrest and uncertainty across parts of the GCC region as well as the larger Middle East and North Africa region, which may negatively impact tourist arrivals.
Several other factors such as oversupply of hotel rooms, high employee turnover, rising cost of construction as well as availability of project financing are some of the other challenges for the industry.
“Despite these factors, the outlook for the GCC hospitality industry remains positive for 2011–2015 due to the strong growth drivers,” it said.