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Gulf hotels defy the downturn
Despite low occupancy and room rates, almost 50 hotels worth a total of $7.3 billion will open in the GCC this year.
April 15, 2010 5:05 by Katherine Azmeh
The GCC hospitality industry seems oblivious to the challenges posed by the turbulent financial climate. As many as 48 new hotels are expected to launch this year, at an estimated cost of $7.3 billion, according to research firm Proleads. Last year, construction in the hotel industry increased by 25 percent compared with 2008, despite the devastating effects of the financial crisis.
Yet tighter credit remains the norm, and questions surrounding the health of the credit, banking, and financial markets linger. Across the globe, the financial recovery is generally regarded as still in its infancy, yet many GCC hospitality sector professionals are bullish.
Religious tourism and business visitors are expected to keep the hospitality sector in Saudi Arabia buoyant, says Maggie Moore. Moore is the organizer of The Hotel Show, at which hospitality sector professionals will tackle the challenge of ensuring sufficient business activity to encourage occupancy rates at new hotels. Scheduled for May 18-20 at the Dubai World Trade Center, the event will convene professionals from all facets of the sector, to consider the state of the industry.
Despite the economic problems felt in Dubai, Moore says the UAE is still one of the most active markets for hospitality. “While much of the recent attention has focused on the impact of the downturn on the hospitality sector, the United Arab Emirates continues to be one of the world’s active areas for hotel openings,” she says. “The UAE alone has over 5,700 rooms coming to market in 2010. Qatar, Bahrain, Kuwait and Saudi Arabia are also seeing increased activity.”
The hospitality sector is expected to prosper across the GCC. Saudi Arabia, for example, is expected to witness the opening of 2000 hotel rooms this year. The 858-room Makkah Clock Royal Tower, which is scheduled to open in late July, will account for almost half of these new rooms. “The luxury hotel is designed to help accommodate the millions of pilgrims who visit Mecca each year amid a severe shortage of hotel rooms,” the hotel’s vice president and general manager Mohammed al Arkobi told The National earlier this week.
Qatar can expect more than 1,900 new hotel rooms to open this year, with 21 new hotels to open by 2013.
While in some places, especially Dubai, room rates and occupancy figures have been hit by the downturn, the number of new hotels springing up suggests that the hospitality industry is on the up.
And this could contribute to vigor in a number of associated industries: Moore says that suppliers to the hospitality industry remain critically important. For this reason, May’s Hotel Show will focus on suppliers such as security services, technology vendors and interior design firms.