The Kuwait Financial Centre (Markaz), the Gulf asset management and investment bank, has published the results of its recent GCC Hospitality report, revealing that the estimated room revenue for the GCC region in 2011 was KD 5.09bn (US $17.83bn) and predicts that by 2016 that figure will reach KD7.11bn ($ 24.92bn).
In its report Markaz also estimates the average occupancy rate for GCC hotels in 2012 to have been 68%, and to increase to 73% by 2016.
To create its report Markaz analysed the regional hospitality industry’s supply and demand dynamics, estimating the current and potential market size, as well as discussing the key drivers of growth in the region.
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The most significant driver for growth in the region identified by Markaz is international tourism, as well as the region’s increasing popularity as a MICE destination and the importance of Mecca and Medina as destinations for religious pilgrims.
The improving economic conditions, governmental support to the private sector, the strategic location of the GCC as an ideal transit point and the performance of the region’s airline industry are all also highlighted as positive signs for growth.
However, the Markaz report goes on to predict that any 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 such as the UAE, Qatar and some parts of Saudi Arabia could also potentially affect the OR and ADR values in the region.
Other potential causes for concern outlined in the report are the high employee turnover levels, complicated labour law and the rising cost of construction.
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