Increasing oil prices bring back Gulf hospitality sector momentum for Expo 2020 Dubai, says report

The GCC’s hospitality sector is expected to gain positive momentum as a result of recovering oil prices and upcoming mega events, according to a new report from Alpen Capital.

According to the report, the GCC hospitality market is expected to grow at a 7.2 percent compound annual growth rate (CAGR), from an estimated $22.9 billion in 2017 to $32.5 billion in 2022.

At a country level, GCC countries hospitality sectors are expected to range from 6 percent to 12 percent, with the UAE on the higher end in part due to Expo 2020 Dubai.

Bahrain and Oman are also expected to grow at a rate higher than the GCC average.

In the report, Alpen Capital predicted that key hospitality operating metrics, which have been under pressure in the past, are expected to have a slow but steady recovery driven by a boost in demand.

Average GCC occupancy, for example, is expected to increase from 62 percent in 2017 to 68 percent in 2022, while average daily rate (ADR) is expected to increase at a CAGR of 1.1 percent to $161 in 2022, while RevPAR is expected to increase at a CAGR of 2.9 percent to $109 in 2022.

Sameena Ahmad, managing director of Alpen Capital Limited, said that the sector’s recovery is on account “of recovery in oil prices, upcoming mega events, increased tourist inflow, positive regulatory initiatives and increased government spending/investments towards the hospitality and tourism sector.”

“GCC countries have well-defined strategies to develop themselves as preferred travel destinations,” Ahmad added.

“They are making significant investments into the development of tourism and hospitality infrastructure including airport expansions to increase the handling capacity of anticipated visitor inflow.”

The report also predicted increasing market penetration by mid-market hotels through 2022, along with the adoption of Airbnb-type renting models. This demand, the report noted, is largely driven by a rise in millennial travelers who “opt for experience, authenticity and value-for-money proposition.”

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