A guide to Qatar's hotel plans

As Qatar Tourism Authority announces revised hotel targets for 2010, Harriet Sinclair investigates which properties are underway, and which projects have gone under

The significant investment in the future of Qatar as a business hub and tourism destination will see the number of business tourists in the country grow from 0.9 million in 2009 to 1.6 million in 2014, according to global information publisher Euromonitor International.

The government’s plans to improve the country’s infrastructure were credited with a future boost to tourism in the country; with the eagerly-anticipated opening of the new Doha International airport in 2012 and plans for a metro system highlighted by the report as particularly significant developments.

Investment from the Qatari government has come as a result of the recorded average annual real GDP growth of 13.4% between 2004 and 2009 on the back of the country’s energy sector, allowing expenditure on tourism to increase — with US $20 billion allocated to developing infrastructure, hotels and exhibition space from 2008 to 2014.

The investment is beginning to pay off, with Qatar Tourism Authority (QTA) reporting a rise of two points in occupancy rates for the first half of 2010; which has seen figures go from 59% during the first half of 2009, compared to 61% for the same period in 2010. In addition, revenues of four and five-star hotels in the country exceeded revenues for the same period in 2008 and 2009.

The addition of new hotels to the market, along with the continuing expansion of Qatar Airways and infrastructure development, is indicative of the government’s desire to expand the reputation of Qatar as both a tourism and business destination.

The Qatari economy has also been ranked the most competitive in the world according to the World Economic Forum’s Global Competitive Report, which saw Qatar ranked 17th in the world, four places ahead of second-highest ranked Middle Eastern country, Saudi Arabia (ranked 21st), and eight places ahead of the UAE (ranked 25th).

However, the World Economic Forum also highlighted the most problematic factors for doing business in Qatar; with 27.7% of respondents citing restrictive labour regulations, 22.3% stating access to financing as a problem and 8.2% of respondents complaining of an inadequate supply of infrastructure — something which QTA is trying to address with its developments.

However, despite a significant number of developments in the pipeline and 2010 being touted as the year 42 hotels would open, QTA has been forced to re-adjust its position.

QTA chairman Ahmed Al Nuaimi told Hotelier Middle East magazine that just 28 of the expected 42 hotels would be open by the end of the year.

He explained: “For the first half of 2010, there were eight hotels that opened. There are about 20 that are scheduled to open for the second half of 2010. The remaining hotels originally scheduled to open by year end 2010 will open in 2011. All in all, we expect about 40 hotels to open in the next 12 months.

“The delays in hotel openings were primarily related to renegotiations with contractors as the result of price adjustments coming out of the global economic crisis. Such negotiations take time. We are pleased to say that all of the projects are going ahead — that nothing has been cancelled.”

Amongst the hotel companies forced to delay their openings was Hilton Worldwide, which has two hotels due to open in Qatar. The first — the Hilton Doha — was due to open in 2010, but was postponed to Q1 2011, and the second —the Hilton Doha Residence — is currently due to open in 2012.

Hilton Worldwide vice president operations Arabian Peninsula and Indian Ocean Essam Abouda said of the delayed opening: “This change in the opening date was due to a delay in the completion of the final aspects of the hotel construction. We plan to open the property early next year”.

In addition to the Hilton Doha, a number of other properties have been forced to delay their openings, with one company unsure when —or even if—its hotel will be operational, however, these companies were unable or unwilling to comment on the pitfalls they had encountered this year.

The Hotelier Middle East table of upcoming properties shows that of the large chains, seven estimate that they will not be opening in 2011 — with one property aiming for 2013-14, and another unable to announce an opening date at this stage, suggesting that unless a large number of independent hotels are set to open next year, the QTA may struggle to fill its quota of openings.

Although the number of openings was significantly lower than the figure QTA originally announced, the hotels which are currently operating reported steady levels of occupancy, concurring with the figures released by QTA for the first half of 2010.

Commenting on business at the Best Western Doha Seef Hotel, Best Western International vice president of international operations — Asia and the Middle East, Glenn de Souza said: “With our current 180-room Best Western Doha Seef, we have been enjoying ADR of US $162 year round and the demand for rooms is still growing strong”.

De Souza attributed the positive rates to business tourism in the country, adding: “The business travel segment is definitely growing in Qatar and that puts the country as one of Best Western’s top strategic destinations for brand expansion. The country is regarded as a high-quality destination for MICE in the GGC region.”

There is no doubt that business tourism is the bread and butter of Qatar’s tourism industry; the hotel market in Doha historically depending on this market along with the government sector, according to Jones Lang LaSalle Hotels senior vice-president — head of hotel advisory Chiheb Ben Mahmoud.

“With the financial crisis, Doha has experienced a softening in corporate demand. However, the business segment is expected to remain the main contributor in the short to medium term. Moving forward, Qatar is one of the few countries expected to experience a positive GDP growth in 2010,” he said.

And creating demand remains an important focus for QTA if it is to ensure that the number of hotels coming up does not saturate the market. It is hoped that larger developments which include hotels will drive, as well as benefit from, visitors to the country.

One such development is Dohaland, which will be completed in stages, with the first stage to be completed in 2014, and the project in its entirety planned for completion in 2016.

Dohaland Hospitality chief executive officer Abdul Aziz Al Emadi said: “We are putting Qatar on the map and bringing new hotel operators and players on to the market.”

“Of course there will be more need with the new airport and growth of different sectors because if you want to become a tourist destination it is not just that you add five-star hotels, there are a number of facilities supporting the destination,” he added.

However, Premier Inn managing director Darroch Crawford said it was important for the hotel market to diversify to avoid over-supply.

“Certainly business travel to Doha is growing and in particular in the area we are developing a hotel, where there are no other hotels at the moment, but I think there is a risk of saturation at the high-end because lots of people are building five-star hotels,” he said.

This was echoed by Ben Mahmoud, but he said that this issue was being addressed by the variety of projects coming on to the market.

“The Doha hotel supply is growing its diversity. The emergence of budget and midscale offerings will offer a wider range of products on the market,” he explained.

Diversifying is key for Qatar’s tourism strategy, as it looks to establish its potential for sport and cultural tourism, as well as its reputation as a business destination.

Marriott Hotels director of sales Talal Khalife said: “Business travel is important, but we cannot depend on it as a sole source of business.”

Hilton’s Abouda said publicising new attractions would make a big difference to the country, while Kempinski Residences and Suites general manager Emel Atikkan explored the possibility that market saturation rested on the development of future events.

“It all depends on the 2022 World Cup bid, and development of MICE and leisure segments,” she said.

However, International Built Asset consultancy company EC Harris’ head of client solutions and partner Simon Light warned against putting too much value on upcoming sporting events.

“The potential of the World Cup is significant, but it is only for a very short period of time,” he explained.

There is clearly much potential to be explored in Qatar, as plans are made to enhance its reputation as a tourist destination. But, like the optimistic announcements of QTA, only time will tell if Qatar’s best-laid plans will come to fruition.