Branded supply in Qatar’s hospitality sector is expected to increase by a compound annual growth rate (CAGR) of 19 percent from 2017 to 2019. While significant supply is expected to enter the 5-star and 4-star segments over the next few years, some delays are expected, which leaves more time for the market to absorb the new supply, Colliers International noted in its Doha Hotels first quarter (Q1, 2107) report released yesterday.
Colliers International is a global network of specialist consultants in hotel, resort, marina, golf, leisure and spa sectors, dedicated to provide strategic advisory services to owners, developers and government institutions to extract values from projects and assets.
On the supply side, Qatar market has seen an addition of approximately 550 keys over the last one year period, primarily in the 5-star segment. However, no new supply was introduced into the Doha market in the first quarter of 2017.
The hospitality sector was weighed on by slowing economic activity and corporate spending in the first quarter. The period witnessed a decline in occupancy rate.
The hotel market occupancy is forecasted to close at 62 percent in 2017, which is still higher than the occupancy rate in some GCC cities that are also heavily reliant on the corporate segment, Colliers International said.
Slowing economic activity is expected to shift demand for hospitality accommodation towards hotel offering at more affordable rates, going forward. With the opening of new malls and other demand generators, Doha is expected to see growth in leisure tourism in the coming years.
The gradual increase in leisure tourism over time is expected to help in diversifying the demand base for the city.
The major hospitality districts in Doha experienced a drop in occupancy and average rate during the first quarter of 2017, with hotels in West Bay and Diplomatic Area being the most resilient. The forthcoming supply in West Bay and Diplomatic Area is dominated by 5-star hotels and serviced apartments. High land cost makes it challenging for investors to consider midscale hotels within the West Bay.
The Msheireb project is expected to have a positive impact on the downtown area. The mixed-use development will be world’s first sustainable downtown regeneration project, including offices, retail & leisure facilities, cultural, entertainment venues and luxury hotel. Due to slowing economic activity, the West Bay Area is expected to see subdued performance in the short term.
Projected to launch in 2019, the Lusail City development comprises of four exclusive islands. It will include 22 hotels, in addition to residential, entertainment, commercial and other hospitality components, designed to support the 2022 World Cup.
According to Colliers International’s Guest Experience Index (GEI), the top 10 brands in Qatar are Four Seasons, W, InterContinental, Sheraton, Kempinski, Crowne Plaza, Rotana, St.Regis, Ritz-Carlton and Fraser Suites.