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Investment banking advisory services provider Alpen Capital said in a new report that the GCC hospitality industry will return to pre-pandemic levels in 2022, growing by 74.8% year-on-year to $26.3 billion in revenue.
The GCC Hospitality report added that the industry is expected to grow at a compound annual growth rate (CAGR) of 6.6% through 2026.
The report provides detailed research and forecasts for the hospitality industry, analyzing the latest trends, growth drivers and challenges facing this dynamic sector. It also profiles some of the well-known hotel companies in the region.
The report was delivered in a webinar, followed by a panel discussion moderated by Sanjay Bhatia, Managing Director, Alpen Capital; Hala Matar Choufany, HVS Yahia Idris, President, Middle East, Africa and South Asia, Head of Nova International. Sameena Ahmad, Managing Director of Alpen Capital, moderated the discussion.
Factors such as increased tourist arrivals, major events such as Expo 2020 Dubai and the upcoming 2022 FIFA World Cup, and relaxation of visa regulations will drive the growth of the industry. With local governments actively supporting the development of business, leisure and entertainment hubs through substantial investment, the GCC is becoming a hub of action with a series of events in the pipeline.
“The pandemic has accelerated the adoption of technology and digitalisation by operators looking to simplify procedures and improve the overall level of customer experience. Demand for mid-sized hotels, serviced apartments and Airbnb is also on the rise,” said Sameena Ahmad, Managing Director of Alpen Capital (ME) Limited, Because it provides flexibility and affordability.
“As the economy reopens after the pandemic, the recovery in business activity has led to a resurgence of M&A activity in the region. GCC has witnessed several cross-border transactions as the company focuses on strengthening its geographic presence while expanding and diversifying its Service offerings. Going forward, consolidation in the hospitality industry is likely to intensify as pressure on companies to drive profitability and gain market share continues to increase in the face of increasing competition and growing threats from online portals and alternative accommodation service providers. ” Director of Alpen Capital (ME) Ltd.
According to Alpen Capital, GCC hotel industry revenue is expected to grow at a CAGR of 6.6% between 2022 and 2026 to reach $34 billion. Strategies adopted by local governments, economic recovery, increase in tourist arrivals, and innovative solutions from operators are the main drivers for the growth of the industry.
The hotel industry revenue in the GCC countries is expected to grow at a CAGR of between 2.9% and 8.0% between 2022 and 2026. The largest markets in the GCC, Saudi Arabia and UAE are expected to witness CAGRs of 8.0% and 5.5%, respectively. Kuwait, Oman and Bahrain are expected to grow by 7.1%, 6.3% and 2.9% respectively. Growth in Qatar is expected to return to normal after the 2022 FIFA World Cup, with a CAGR of 4.3% between 2023 and 2026.
After witnessing significant growth this year, hotel operations metrics are likely to grow steadily in the future. Average occupancy across the GCC is expected to rise from 57% in 2022 to 62% in 2026. Average daily rate is expected to increase from $145 this year to $151 in 2026, while revenue per available room is expected to increase from $83 to $93, representing annual growth rates of 1.1% and 2.9%, respectively.
Business confidence in the region is rebounding faster as borders reopen and travel restrictions ease. The GCC is fast becoming a global hub for business, entertainment and sporting events and will host major events such as the 2022 FIFA World Cup, Formula 1 Grand Prix, World Aquatics Championships, Geneva International Motor Show in Qatar, Asian Games and more. In addition, rising per capita income will increase domestic consumer demand, which will continue to help boost tourism.
GCC countries are also upgrading their transport ecosystems, from expanding airport capacity to adopting Hyperloop-based transport and new rail corridors. They have been actively investing in developing tourism-related infrastructure while promoting leisure destinations. Saudi Arabia, in particular, has undertaken several socio-economic reforms to make the kingdom more modern, liberalized, business and tourism friendly to increase its attractiveness to international tourists.
However, the report also noted that sharp adjustments in global inflation, oil prices and incomes pose a threat to the industry. High inflation may affect consumers’ purchasing power, while travel may also be affected by uneven vaccination rates and new COVID-19 strains.
The Covid-19 outbreak has required the region’s hospitality industry to diversify its offerings to remain competitive and relevant to attract tourists, and the industry has responded with innovative and dynamic new business models.
Notable trends include the introduction of mid-sized brands and serviced apartments, and digitalization helps operators streamline workflow, reduce costs and enhance customer experience. Alpen reports that the Airbnb model is also starting to make considerable progress in the GCC.
Religious tourism continues to play an important role, and the growth in the number of pilgrims has forced Saudi Arabia to offer a wide range of hospitality services. Other states are adopting different models of interaction between heritage and religious spheres to attract tourism. Going forward, the hospitality industry in the GCC is expected to strengthen amid the crisis, ahead of its peers. – arab trade news agency
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