Nestled in the Arabian Gulf with a collection of 33 natural islands, Bahrain takes the title of the smallest GCC country. But despite being a tiny island nation, in 2017, the total number of visitors to Bahrain reached 11.4 million given the country’s resident population is only 1.5 million people. It has long been a leisure haven with GCC residents, especially from neighbouring Saudi Arabia, dropping by often for short weekend trips using the popular King Fahad Causeway.

“Intra-regional tourism is an important driver for Bahrain’s hospitality sector, led by Saudi Arabia as our largest source market, and followed by other GCC nations,” confirms Jerad Bachar, executive director for investment promotion at Bahrain Economic Development Board (EDB).

In terms of purpose for visiting Bahrain, Christopher Hewett, director at TRI Consulting, points out that leisure tops the hospitality market segment: “Leisure purposes are the key reason for visiting Bahrain followed by shopping, business and visiting friends and relatives.”

Tourism and hospitality play a key sector for the nation and Bachar says EDB recognises this as offering a competitive edge for the country. “It [tourism] contributes 6.3% to the country’s gross domestic product (GDP), a figure set to continue to grow as Bahrain continues to add new hotels, retail and leisure developments currently underway,” Bachar adds.

Wyndham Grand Manama marketing director Basel Qabouq shares the same optimism: “Bahrain is mainly a leisure weekend destination, but we are seeing a healthy growth in MICE demand and corporate growth, with the special focus on Fintech and the ease of investment after the changes made in the laws, the amount of foreign investments and start-ups is growing by the day.”

But despite attracting millions of annual visitors and a growing supply of rooms, Bahrain’s hotels, Hewett notes, witnessed a relatively soft performance in 2017. Occupancy rates went down by 1.1 percentage points to 53.8% while average daily room rates (ADR) fell by 6.7% to US$171.4. As a result, the revenue per average room (RevPAR) took a hit too and the levels dropped by 8.5% to $92.4.

Investment and Demand

Bahrain’s hotel sector is witnessing a steady stream in the supply of rooms. Just within the first quarter of 2018, three hotels opened — Jumeirah Royal Saray Bahrain in February 2018, The Grove Resort Bahrain, and Park Regis Lotus Hotel.

Last year, the world’s largest Wyndham Garden opened in Manama, along with the 263-key Wyndham Grand Manama and the Ibis Styles Hotel; and in 2016, four new hotels were added to Bahrain’s offering: Ramada Hotel & Suites Amwaj Islands, a four-star Hotel, Lagoona Beach Luxury Resort & Spa Residences, Downtown Rotana, and Gulf Suites Hotel Amwaj.

Commenting on the slew of branded hotel openings, Bachar says he credits the country’s “pro-business regulatory environment” which has enabled it to show its potential as an attractive investment destination in the GCC.

He says: “Bahrain has developed an attractive investment destination for hotels and hospitality sector, thanks to its pro-business regulatory environment, with low tax and 100% foreign ownership nationwide with no free-zone restrictions, talented local workforce, and strong economic growth fundamentals.” Apart from investment-friendly rules, the kingdom, Bachar points out, also provides the hospitality sector a “strong network of support”.

“This network of support comes from coordinated engagement through the Economic Development Board and our network of landowners, investors, developers, and advisors.  We aim to support investors in their engagement with key agencies such as the Bahrain Tourism and Exhibition Authority (BTEA), Real Estate Regulatory Authority, and the Ministries of Commerce, labour, health, and interior.  We can also coordinate discussions with Bahrain’s labour development agency, Tamkeen, which provides an array of assistance in hiring and upskilling the dynamic Bahraini workforce,” Bachar further explains.

To continue its infrastructure development scheme, at the end of December 2017, EDB revealed that Bahrain has invested more than $13 billion. The investment, Bachar states, will be “spread across 14 tourism projects including the $1.1 billion Bahrain International Airport’s modernisation and expansion project which will increase capacity to upwards of 14 million passengers a year”.

“Tourism is one of our sectors  with the highest growth potential for investment and last year accounted for 10% of the total inward investment flows into the Kingdom, with major projects from Action Hotels and Jumeirah Resorts.  This year we will be building on that strong foundation to attract further strategic inward investments to help realise the tourism sector’s growth potential,” Bachar adds.

Besides hotels and upgrading the airport, the investment will be used for several projects including the development of a medical tourism project at King Abdulla Medical City, five new five- and four-star hotels which are under construction, three major retail destinations and six mix-use real-estate projects.

To help funnel in more tourists, the government is also adding a total of seven new aircraft — five Boeing 787-9 Dreamliners and two Airbus A320neo aircraft to the kingdom’s flag carrier, Gulf Air’s fleet.

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