Be our guests! GCC makes more room for visitors as hospitality hub to hit $24b by 2016
The hospitality industry in the GCC, home to world-class hotels and recreation facilities, is poised to grow at 6.93 per cent to reach $24.92 billion by 2016, a report issued by Kuwait Financial Centre yesterday said.
The Markaz Sector Reports 2013 looked into the growth drivers, trends and challenges in the hospitality sector. It suggested that the industry, valued at $17.8 billion in 2011, has been performing well and has shown strong indications that it will continue to make great strides in the years to come.
A major contributor to this growth is the UAE, whose travel and tourism sectors account for approximately 14 per cent of the country’s GDP, compared to 5 to 6 per cent in Saudi Arabia.
In terms of hospitality revenues, however, Saudi Arabia is expected to capture a bigger proportion of the total market, about two thirds, while the UAE will have a little over a quarter of the share by 2016.
“The UAE’s travel and tourism is composed of many facets, whereas Saudi Arabia’s hospitality sector is inclined towards the revenue generated through the religious tourism,” M.R. Raghu, senior vice president for research at Kuwait Financial Centre said in response to Gulf News’ questions.
Countries in the GCC account for more than half (52 per cent) of the combined oil reserves of members of the Organisation of the Petroleum Exporting Countries (Opec). Over the past years, the GCC countries have introduced some reforms to diversify their oil-based economies away from the hydrocarbon sector, and the region’s travel and tourism have proven to be a good opportunity for diversification.
The report said the hospitality industry will be driven by the expansion of the private sector, efficient investment of oil exports in infrastructure, higher international tourist arrivals and hosting of prestigious international events. The growth in business tourism and favourable economic conditions are also major drivers.
As of 2011, the GCC accounted for nearly 400,000 hotel rooms, while an additional 59,945 rooms were in the pipeline. Last year, the occupancy rate stood at 67 per cent, and it is forecast to reach 73 per cent by 2016. Owing to high leisure and business demand, the average daily rent, pegged at $204 last year, is expected to grow to $227 by 2016.
Between this year and 2023, the region will continue to draw more tourists worldwide, as arrival numbers are estimated to increase at a compound annual growth rate (CAGR) of 4.7 per cent. Business travel spending has likewise posted a positive growth, achieving a CAGR of 6.04 per cent for the period 2008 to 2012.