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Dubai Expo 2020 and Saudi Vision 2030 fuel hotel growth

The iconic Ritz Carlton in Riyadh will be joined by many more hotels Supplied
The iconic Ritz Carlton in Riyadh will be joined by many more hotels
  • Middle East hotel performance close to pre-pandemic levels
  • Over 600,000 hotel rooms in planning stage in MENA region
  • Saudi has most ambitious targets, with goal of 100m tourists by 2030

The success of Expo 2020 in Dubai and interest in Saudi Arabia and its Vision 2030 programme are boosting investment and fuelling the hotel pipeline in the Middle East, experts said on Wednesday.

Analysts say that while the pandemic cast uncertainty upon the regional hospitality landscape with hotel investment impacted, market sentiment has significantly improved on the back of ambitious growth plans.

“Hotel performance for the Middle East region is getting close to a full pre-pandemic recovery in 2022, which would be an outstanding outcome,” said Philip Wooller, senior director Middle East & Africa at hospitality analysts STR.

“Hotel rates are the main driver of revenue per available room (RevPAR) so far, with occupancy also closing in on 2019 levels. Meanwhile, anticipation is high for the upcoming World Cup in Qatar and the effect it will have on both national and regional hotel performance.”

Wooller’s comments come as new research put together by STR and real estate consultants Knight Frank suggest the Middle East is set to see more than 100 million tourist arrivals and over $270 billion in revenue contribution in 2022. 

Released ahead of the Future Hospitality Summit taking place in Dubai later this month, the research shows that the Middle East’s travel and tourism sector has “all the positive indicators” to reach the goal of 160 million tourists in 2030.

Turab Saleem, partner and head of hospitality, tourism and leisure – MENA at Knight Frank, said: “The region is going through a fascinating transformation in the hospitality sector, with over 600,000 hotels rooms in the planning and development stage.

“This quantum of development, which has not been seen before in the Middle East or even globally, is set to change the shape of the region’s tourism industry in the years to come and will help to further raise the region’s profile as one of the world’s key hospitality players.” 

Tower, Building, Architecture
The world famous Burj Al Arab in Dubai is among the many beneficiaries in tourism growth

Analysts said that the successful management of mega events has proven to be a key driver in the growth in tourism and hospitality, with the UAE welcoming almost 24 million visitors to Expo 2020 Dubai, boosting international traveller confidence. 

With 65,000 hotel rooms under development in Dubai, tourism contribution is set to reach 15 percent of GDP by 2030, the highest in the region and among the highest in the world, with an international average of nine percent. 

The Middle East has been at the forefront of hotel performance recovery throughout the pandemic according to data from STR, and that momentum continues in 2022 and beyond. 

Wooller added: “Dubai is having a tremendous year, with hotel RevPAR for the year-to-date period up to July 23 percent higher than 2019.

“With most destinations in the region rebounding and in many cases surpassing pre-pandemic performance levels, investor interest remains high, of which the proof is in the hotel pipeline.

“The success of Expo 2020 in Dubai and a keen interest in Saudi Arabia and the transformative Vision 2030 have boosted investment and fuelled the hotel pipeline in the region,” he said.

“With the first mega projects nearing their first phases of completion and new ones being announced, the kingdom is now firmly among the fastest growing countries globally for hotel development.”

The hospitality market in Qatar is also expected to grow to $54bn by 2030, according to Knight Frank. “Hosting the FIFA World Cup is a great opportunity for Qatar to develop its tourism sector to new heights. The country has allocated $45bn worth of funds for tourism and travel growth by 2030,” explained Saleem.

He added that there are over 56,000 hotel rooms under development with an estimated value of $7bn with international brands representing 62 percent of the inventory in the pipeline.

Saudi Arabia, which has $110bn worth of hotel projects planned for completion by 2030 and a total of 310,000 hotel keys under development, has one of the most ambitious tourism targets in the region, with the goal of 100 million tourists by 2030.

Concerns have been voiced, however, that tourism growth plans in the Middle East could be hampered by a lack of skilled workers.

Real estate service provider Colliers says the GCC will require more than 90,000 skilled professionals in its hospitality sector by 2026, of which nearly 86,000 will be needed in the UAE and Saudi Arabia.

The region’s hospitality investment outlook will be discussed in detail at the Future Hospitality Summit, which is set to attract more than 120 top level speakers and over 40 sessions. 

Landscape, Nature, Outdoors
Plans for a rotating and floating hotel in Qatar by 2025. Source: Hayri Atak Architectural Design Studio

Predicted GCC tourism growth rates to 2026

  • Growth in the hospitality sector revenue of individual GCC countries is expected to range from a compounded annual growth rate (CAGR) of 2.9-8 percent between 2022 and 2026, according to Alpen Capital 
  • Saudi Arabia and UAE, the largest markets in the GCC, are expected to witness CAGRs of eight percent and 5.5 percent, respectively
  • Kuwait, Oman and Bahrain are expected to grow at 7.1 percent, 6.3 percent and 2.9 percent, respectively 
  • Growth in Qatar is expected to normalise after the completion of the FIFA World Cup 2022, with a CAGR of 4.3 percent between 2023 and 2026

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