Doha
SUPPLY
Doha has seen an influx of more than 1,500 keys over the last one year, primarily in the five-star segment. However, no new supply was introduced into the Doha market in Q3 2016. While significant supply is expected to enter the four- and five-star segments over the next few years, delays are typically expected in Doha, which leaves more time for the market to absorb the new supply. Branded supply is expected to increase by a CAGR of 19% from 2016 to 2018.
MARKET PERFORMANCE
Due to a drop in prices and slowing economic activity, hotels are experiencing a decline in demand. The hotel market occupancy is forecasted to close at 66% in 2016, which is still higher than the occupancy rate in some GCC cities that are also heavily reliant on the corporate segment. Serviced apartments have experienced relatively stable performance levels and seen stronger resilience during tough times when compared to hotels.
OUTLOOK
The serviced apartments concept continues to evolve and appeal to a wider target audience. Its strong resilience and limited presence in the market will appeal to hospitality developers and investors.
District in Focus: Doha Downtown
INTRODUCTION
Doha Downtown is home to several key demand generators including the Corniche, Souq Waqif, Qatar National Museum and Msheireb Downtown. The latter is currently undergoing a US $5.49 million (QAR 20 million) regeneration project to add retail, residential, museums and hotels to the area. In addition, the upcoming Doha Metro, which is expected to be completed by 2020 will host several stations in the Downtown area.
SUPPLY
The market currently is dominated by five-star hotels. The announced future hotel supply contains a significant share of four-star hotels amounting to 48% of the total pipeline, followed by the five-star segment with a share of 44%. Due to the economic slowdown, hotel projects in Doha have been delayed. This also had an effect on the timely delivery for current construction works in Downtown Doha, where 18% of future hotel supply has already seen a delay of approximately two years.
HOTEL PERFORMANCE
The third quarter of 2016 saw a substantial drop in both occupancy and ADR resulting in a 25% decline in RevPAR. Transient corporate demand has declined during this period, mainly due to a decrease in corporate travel in the summer months thereby leading to many hotel operators to implement a volume based strategy. Overall RevPAR decline for the Downtown area is expected to be marginally lower than the overall Doha market.
OUTLOOK
The Msheireb project is expected to have a positive impact on the Downtown area including a potential diversification of the client base. This could mitigate the risk of being too reliant on a single type of demand. The Doha Metro is expected to facilitate easy access to places of interest such as Souq Waqif, the Corniche and the Qatar National Museum, increasing foot-fall significantly.
Filippo Sona director, head of hotels (MENA), Colliers International.
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