The GCC's hospitality industry estimated room revenue is expected to reach USD 24.92 billion by 2016 at a CAGR of 6.93, said a report here on Thursday.
In 2011, it stood at USD 17.83 billion, while average occupancy rate is estimated to be 68pct for the year 2012 and expected to reach an average occupancy of 73pct by 2016.
The GCC is home to high percentage of luxury hotels and its pipeline is also dominated by many high profile projects. As such, the Average Daily Rent (ADR) for the year 2012 is estimated at USD204 which is relatively on the higher side in comparison with other regions, said the report by local investment company Kuwait Financial Centre or Markaz.
While issues like political unrest and oversupply affected the OR and ADR in the past, the forecast for both these metrics is positive with increasing business as well as leisure tourist demand, it added.
There are several growth factors driving the hospitality industry in the GCC but international tourism has to be the most significant one. The GCC region is home to some of the finest hotels in the world and people visit the region for niche tourism offerings such as cultural, religious tourism as well as sports and event based tourism.
The region is increasingly seen as a MICE destination (Meetings, Incentives, Conferencing and Exhibition) while cities like Mecca and Medina are visited by religious pilgrims across the world.
The improving economic condition, government's support to the private sector, the strategic location of the GCC as an ideal transit point along with the better reach from the airline industry fosters well for the hospitality industry.
Skewed supply of hotel rooms towards upscale and luxury segment is a key trend in the hotel industry. These hotels provide services including spa and gymnasium facilities for which the demand is on the rise. Also, some of the big international hotel chains are increasingly showing willingness to form tie-ups with local players and the latter are being recognized for their remarkable and novel services.
Service apartments have grown in the GCC region with the rise of business travellers and expatriates who look for longer stays at reasonable prices.
The possibility of a negative shift in the socio-economic and political instability of countries in the Middle East could impact the revenues of the region's hospitality industry.
Other issues like oversupply in countries like UAE, Qatar and some parts of Saudi Arabia affected the OR and ADR values in the region. The high employee turnover and the labor laws in the region are a cause of concern for the hoteliers.
The rising cost of construction coupled with stringent lending policies are some of the other key challenges in the industry, concluded the report.