Nine ways the World Cup will transform Qatar

Reuters

• Transitory impact of tournament to reap long-term economic benefits
• Investment in hospitality, retail and transport supports tourism
• Qatar hopes to attract investment in digital-based technologies 
• ‘Soft power’ boost could prove challenging to realise 

Qatari strategists conceived the World Cup as a catalyser for long-term development ambitions. Across a range of economic sectors, the government has sought to embed the transitory impact of the tournament with longer-lasting side-benefits.

None are more evident than in the tourism sector. As Berthold Trenkel, chief operating officer of Qatar Tourism, told AGBI: “The legacy of the Fifa World Cup Qatar 2022 will play an important role in our future.

“Our goal by 2030 is to raise tourism to 12 percent of GDP, increase visitors’ in-destination spend by three- to four-fold from 2019 levels, position Doha as one of the top 20 cities by spend per tourist, and make Qatar a global leader in service excellence.”

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However, there are challenges to confront. “A lot of the economic gains have already come and gone in advance of the World Cup, with the construction boom creating strong non-hydrocarbons growth in the past decade,” said James Swanston, London-based Mena economist at Capital Economics.

With so many sectors affected, below are nine ways the World Cup will transform Qatar.

1 Qatar tourism

The World Cup will serve as a potent fillip for furthering Qatar’s long-term tourism goals. 

“We have an ambitious strategy to boost the number of inbound visitors to Qatar to more than six million a year by 2030, which would make Qatar the fastest growing destination in the Middle East,” Qatar Tourism’s Trenkel said.

The World Cup will provide a springboard to developing the emerging and untapped international tourism sector in Qatar, build much needed awareness of the country, and put the state on the map for international visitors.

The latter will be achieved by “boosting the entire tourism value chain, increasing local and international visitor demand, attracting inward investment and driving a multiplier effect across the domestic economy,” Trenkel added.

“From a tourism perspective, we’re investing in world-class infrastructure to create a dynamic and more diversified economy beyond our natural resources, driving the development of the private sector and fields such as tourism, to become an integral component of national GDP.”

Investment in infrastructure that supports tourism covers Hamad International Airport, Qatar Rail Project, Msheireb Downtown Doha, and cultural landmarks such as museums. Qatar is also developing a new Grand Cruise Terminal, which will serve as a maritime getaway.

2 Gulf tourism

Qatar’s Gulf neighbours are more than interested bystanders. The World Cup could also deliver a lasting region-wide tourism boost, given the travel corridor established for the tournament and the cross-border transport connections.

Dubai’s well-known offering is likely to gain renewed recognition from the overspill of tourists attending the event from the UAE, just a short flight away.

The emirate looks to be the main beneficiary outside of Qatar, given its geographical proximity and its already well established tourism offering, airline connections and multiple-entry tourist visas for World Cup ticket holders.

It already boasts substantial hotel capacity; it is more than three times larger than that of Qatar, notes Standard & Poor’s.    

Swanston said: “While the World Cup may advertise Qatar to Western tourists, it’s far more of a one-off destination compared to Dubai, which is a similar climate and is more hospitable to Western tourists – and obviously has the reputation alongside it.”

Even Saudi Arabia, which lacks the credentials of other Gulf states as a tourism destination, has made sweeping changes to capture international tourism.

Its Vision 2030 is targeting more than double the sector’s contribution to GDP to 6 percent in 2030 from 2.9 percent in 2018. 

3 Retail revival

Qatar saw a revival in its retail market in 2022 and will look to cement the gains in the post-World Cup period with major new retail space and investment in the shopping experience.

Increased tournament related footfall will give a near term boost to mall operators, but further ahead inflationary headwinds will likely dampen activity as discretionary consumer spend feels the pressure. 

Many Qatari retailers will receive a major boost from the tournament, with clothing, sporting goods and supermarkets set to benefit.

Fitch Solutions estimates this will provide about QR4.3 billion ($1.18 billion) in additional revenues. That will set Qatari retailers up for future growth, and cater for an increase in consumers that will be generated by future sporting events.

Consultancy Cushman and Wakefield says that with the launch of new malls like Place Vendome in Lusail covering more than 200,000 square metres, the sector will see a rapid increase in leasing space.

New developments have gradually grown, leaving around 1.7 million square metres of leasing space.

In total, the projects that have been built in the run-up to the World Cup have increased retail space by over 20 percent. The danger is that the additional capacity could put pressure on rental rates over the longer run. 

4 Hospitality sector

Qatar’s hospitality sector stands to gain from the sustained spending on tourism and related infrastructure ahead of the World Cup, with a lasting recovery in tourism numbers supporting hotel occupancy rates and restaurant use.

According to consultancy Knight Frank, Qatar could see its hospitality market grow by 89 percent to over 56,000 hotel keys by 2025.

Looking beyond the World Cup, the tourism and hospitality sector is expected to contribute 12 percent of GDP by 2030, making it worth about $55 billion.

Faisal Durrani, head of Middle East research at Knight Frank, said that with nearly 27,000 hotel keys expected to be delivered in the next three years, there will be a “phenomenal” change in Qatar’s hotel offering by the end of 2025.

“The near doubling in capacity to over 56,000 rooms will be in a post-World Cup environment and comes as the country prepares for an anticipated visitor influx following heightened interest in Qatar once the excitement of the World Cup subsides,” he said. 

Qatar Tourism’s Trenkel added: “The tourism and hospitality sector is in a good position to benefit as we have been investing in new infrastructure, including the construction of many new resorts, hotels and hotel apartments, which will meet the needs of every budget and add to the existing list of 180+ properties, plus a sophisticated metro system.”

5 Sports hub

The World Cup is the main driver for Qatar’s ambition to sporting hub status, with a clutch of major events following in the tournament’s wake.

Doha will again host the Asian Games in 2030. Other major international events will include Formula 1 motor racing, the ATP tennis competition, the 2024 World Aquatics Championships and European Tour golf. 

Undaunted by the negative headlines that have surrounded Fifa 2022, Qatar is determined to push ahead with these showcase events, and is showing interest in hosting the Olympics in 2032.

Such ambitions are rooted in reality: the vast bulk of facilities needed to stage such events are now in place, with the stadiums built for the World Cup providing the necessary ecosystem.

Qatar has thought strategically about how the World Cup stadiums could be used for domestic benefit.

Under post-tournament plans, some of the larger stadiums will see their capacities reduced to make them suitable for use by local communities. The smaller stadiums – those below 40,0000 capacity – will be put to mixed use. 

Another sports related move was the launch of the Qatar Sports Tech (QST) in 2018, which aims to leverage Qatar’s World Cup hosting status as a a global centre for sports technology development. QST offers accelerator programmes for tech startups focused on sport.

6 Aviation boost

Qatar Airways is a key conduit for the emir state’s post-World Cup tourism strategy, working in lockstep with other government agencies to ensure that the boost will continue to drive consumers to a carrier that is less well known to international travellers than the likes of Dubai’s Emirates Airlines.

It helps that the chairman of Qatar Tourism, Akbar Al-Baker, is also the group chief executive officer at Qatar Airways Group – ensuring tourism and aviation are working towards the same ends. 

Qatar Airways – which during the coronavirus pandemic was in receipt of a substantial government bailout worth QR7.3 billion – is also boosting its workforce by 10,000 to handle the increased traffic, taking total staff numbers to more than 55,000 people.

That is a sure sign that it sees a sustained increase in traffic post-tournament, and that the customer experience will drive more passengers through Doha in coming years.   

Having cut its destinations to 33 cities during the pandemic, the airline is now back to serving more than 150 destinations.

Under its post-World Cup growth plans, Qatar Airways has also been on the acquisition trail, taking holdings in Hong Kong’s Cathay Pacific, China Southern Airlines and Chile-based LATAM Airlines.

It is also the largest shareholder in International Airlines Group, a major global airline conglomerate. 

7 FDI and infrastructure 

Qatar ploughed billions into infrastructure in preparation for the World Cup, with new road, rail, wastewater, school and hospital facilities, and substantial upgrades to the existing framework.

Many of these were tied to the Qatar National Vision 2030 roadmap, which included projects designed with post-World Cup sustainability in mind.

The huge spend on creating the likes of the Doha Metro, and the expansion of its airport, were critical to its chances of hosting a successful event.

These pieces of infrastructure are designed for the long term. Qatar’s future spend will decline post-tournament.

As Qatar World Cup CEO Nasser al-Khater has said, the country’s focus will shift from infrastructure development to tourism and will likely go in the direction of Russia post-World Cup 2018.

The authorities are also looking to capture more foreign direct investment (FDI), taking advantage of 100 percent ownership rights afforded to foreign investors.

Although the government has claimed a double digit increase in inward investment in 2021, data suggests the country’s stock of FDI has fallen in recent years – squeezed by the impact of the pandemic and the GCC trade dispute.

FDI stocks stood at $27.5 billion in 2021, compared to $31 billion in 2019, according to UNCTAD figures.

8 Technological transformation

Transforming Qatar into a technologically advanced society lies at the heart of Qatar Vision 2030, and the World Cup should leave a lasting tech legacy for the country.

Preparations for hosting the tournament have allowed it to develop its technology infrastructure. With more than one million visitors attending, Qatar had to upgrade its telephony networks, becoming an adopter in rolling out 5G capacity.

Telecom operator Ooredoo has installed Ericsson’s 4+0 MINI-LINK carrier aggregation microwave hops to support the increase in data traffic, doubling network capacity and significantly improving the 5G experience.

Such benefits will accrue to Qatari telecom users long after the last ball has been kicked.

One of Qatar’s aspirations was to use the tournament to attract investment in digital-based technologies, such as the internet of things and virtual reality.

The authorities hope the showcasing of such technologies at the World Cup will help attract future investment. The Investment Promotion Agency of Qatar has formed a number of partnerships to foster tech innovation.  

The cornerstone of Qatar’ digital ambitions lie in the Smart Qatar (Tasmu) Programme, working with key partners such as Microsoft.

Tasmu aims to harness the power of technology and innovation to open new opportunities for the private sector in five priority areas: transport, healthcare, logistics, environment and sports.  

9 Soft power

The World Cup may have been conceived in part to help Qatar project global influence, but the vaunted “soft power” benefits of bringing the Gulf state to wider international attention may be difficult to realise.

Analysts caution that the negative international headlines that Qatar has received, primarily over its use of migrant labour, may outweigh any benefits to Qatar’s reputation from staging the event.

David Roberts, author of Qatar: Securing the Global Ambitions of a City State, said: “We keep hearing these views from different companies and individuals, and that you mustn’t say anything particularly positive about Qatar, you mustn’t feel sympathy towards it.

“And that really does seem to be cutting through, among ‘normal’ people and companies who have got nothing to do with international relations.”