Doha

SUPPLY

Doha saw an influx of 538 hotel keys in Q2 2016. The most recent openings included properties such as the Mövenpick Al Aziziyah and the Centro Capital Doha. Supply is expected to grow at a strong pace, with a large pipeline over the next few years. However, more than 20% of the announced forthcoming supply has already been delayed by one or more years, which leaves more time for the market to absorb the new supply.

MARKET PERFORMANCE

Due to a drop in oil prices, slowing economic activity and Ramadan, hotels experienced a decline in demand during the second quarter of 2016. The hotel market occupancy is forecasted to close 2016 at 64%, which is still relatively higher than the occupancy rate in some GCC cities which are also heavily reliant on the corporate segment.

OUTLOOK

Slowing economic activity is expected to shift demand for hospitality accommodation towards hotels offering more affordable room rates. On the other hand, the upcoming demand generators such as Lusail City and Msheireb Downtown are expected to increase the appeal of Doha as a leisure destination. The increase in leisure tourism will be gradual over time, and will result in a more diversified demand base, reducing the risk of being reliant on one major segment.

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District in Focus: West Bay

INTRODUCTION

West Bay is currently represented by 4,178 hotel keys, predominantly four and five-star hotels, serving mostly corporate and governmental clientele.

SUPPLY

The announced future hospitality supply is overwhelmingly five-star with an expected average growth of 14% until 2018, with only one four-star hotel announced. The high land cost makes it more challenging for investors to consider mid-scale hotels, hence no such projects are announced in West Bay.

HOTEL PERFORMANCE

Q2 2016 saw a substantial drop in both occupancy and ADR resulting in a 19% decline in RevPAR. Corporate demand has decreased as a result of falling oil prices. In addition to the market slowdown, the holy month of Ramadan contributed to the decline in occupancy as well. Online travel agents remain an important source of bookings for the leisure segment, despite impacting the profitability of the bookings. Demand from GCC families is typically seen during weekends as high-end hospitality offerings West Bay discount their room rates.

OUTLOOK

West Bay is expected to maintain its segment mix with the corporate market accounting for more than 75%. The online booking channels are expected to gain momentum as a result of the slowed growth in corporate demand. The announced future supply is expected to increase the number of fine dining and speciality restaurants within the district. With the current decline in RevPAR, hotels should focus on other sources of income such as F&B. If successfully implemented, F&B revenue can account for as much as room revenue, or even more in some cases. Having a more attractive F&B offering will also lead to a more appealing property, thus having the potential to improve the hotel’s RevPAR as well.