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UAE hospitality sector set for 10.4% growth till 2016  Join our daily free Newsletter

MENAFN - Khaleej Times - 09/10/2012

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(MENAFN - Khaleej Times) The hospitality market in the UAE, the second largest in the GCC region after Saudi Arabia, is expected to record an annual growth rate 10.4 per cent till 2016, driven by strong tourist inflows and steadily strengthening operating metrics, Alpen Capital said on Sunday.

"The UAE provides a fair mix of leisure and business options and is continuously developing itself to attract more visitors every year. The country's tourism sector has been gaining traction over the past few years as leisure, business, and MICE (meetings, incentives, conferences, and exhibitions) demands have grown strongly," said the investment bank in a report.

While tourist arrivals in the UAE are likely to grow at a compound annual growth rate of 5.3 per cent between 2012 and 2022, hotel supply is expected to increase at 5.3 per cent from 96,992 hotels in Dubai and Abu Dhabi to 125,383 hotels in 2016, Alpen said in its GCC Hospitality industry report.

Alpen said it expects occupancy rates to rise to 75. per cent in 2016 from 71 per cent in 2011as the momentum of tourist arrivals growth picks up. "As business travel in the country continues an uptrend, leisure demand for the upscale segment grows. Average daily rate is expected to increase at annually at 3.7 per cent from 183.5 in 2011 to 220 by 2016.

The investment bank observed that the UAE government's investment in infrastructure is likely to emerge as a huge positive. "These factors are likely to enhance tourism activities in the country, which in turn would boost hotel demand. In 2012, the Dubai government announced a 7.8 billion airport expansion project to meet the rising passenger inflow into the city," it said. Across the GCC, the hospitality market is anticipated to grow at an annual rate of 8.1 per cent to 28.3 billion by 2016 compared to 19.2 billion in 2011.

"The GCC hospitality sector is poised for a healthy growth owing to factors such as favourable economic conditions combined with infrastructure development, increased bids to host high profile global events and government support to the private sector. All these factors have contributed to the steady increase in tourist arrivals which in turn has facilitated the growth of the hospitality industry in the region," said Sameena Ahmad, managing director at Alpen Capital.

"The GCC hospitality industry has been high on the investment radar of businesses given the macroeconomic trends and the rise in business/ leisure visitors to the region. The industry has strong fundamentals and is beginning to realise its potential. Accordingly, we believe that the industry presents itself as an excellent opportunity for all stakeholders,"said Sanjay Bhatia, managing director at Alpen Capital.

The report noted that occupancy rates are expected to average around 67"73 per cent between 2012 and 2016. "As business and leisure tourism continues to grow and the up-scale hotel segment account for most of the demand for hotels, average dialy rate is likely to average around 212"247 between 2012 and 2016. Saudi Arabia is expected to remain the largest GCC market in terms of revenues, followed by the UAE. Qatar is expected to be one of the fastest growing market, driven by rising business tourism and leisure tourism as the country prepares itself for the FIFA World Cup 2022, and in order to achieve its 2030 national vision," it said.

The report noted that tourist arrivals in the GCC are also increasing on emergence of the region as a preferred tourist hub due to varied offerings for tourists. These range from shopping festivals to annual sporting events to conferences and exhibitions attracting both leisure and business travellers.

The region's aviation industry has undergone a drastic change with carriers such as Emirates Airlines, Qatar Airways and Etihad turning into global carriers. These companies have facilitated the countries transformation into successfully global hubs for millions of transit passengers.


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