May 18, 2020

Quarterly Report Qatar Q1 2020: Hospitality Market Overview

Covid-19 will undoubtedly affect the industry,
which is yet to be fully reflected in the statistics
available

According to the PSA (Planning and Statistics Authority), tourist
arrivals in February 2020 exceeded those of 2019 both by air
and sea. Unfortunately, the enforced government restrictions on
international travel into Qatar resulted in a fall-off in arrival
numbers from March 17th.

Hotel performance figures for Q1 will not capture the impact of
the Covid-19 pandemic on the tourism sectors. The hospitality
sector was the first to feel the implications of the Covid-19
measures in both room bookings and restaurant revenues.

Long term residential lets at the hotels with serviced apartments
helped mitigate the revenue hit to some degree. While many
hotel properties have revenue performance obligations in their
hotel management agreements; in most cases these Force
Majeure clauses can only be implemented over a more
prolonged downturn in performance.

In March, many government or semi-government entities
announced measures to support the sector with Qatar Cool
waiving both consumption and capacity fees for three months
for hospitality establishments. Katara Hospitality also
announced in March that their retail and F&B tenants within
hotels will be exempted from rent for three months with
immediate effect. The pandemic is also affecting the
construction sector, which is likely to result in fewer hotels than
expected being delivered this year.

The National Tourism Council’s report for 2019 was released in
Q1. Last year saw continued growth in the sector, with a 9%
increase in occupancy rates, despite the increase in overall
supply. Visitor numbers reached 2.14 million, up 17% from 2018.
This included a 98% growth in visitors on cruise ships – a key
growth market in the tourism sector.

Hotel supply increased to 27,261 keys in 130 establishments by
January 2020, a 6% increase on the previous year. The market
is dominated by five-star brands, which make up 56% of the
overall supply. There are currently 107 hotel and hotel
apartment buildings under construction in Qatar, which will
provide 21,577 additional rooms. This will bring total supply to
almost 50,000 rooms by 2022 – a figure which will be
supplemented by floating hotels and cruise ships for the 2022
FIFA World Cup.

Average Daily Rates in Qatar’s hotels fell by 2% in 2019
reflecting increased competition and better value available in the
market. The increase in occupancy last year, and a reduction in
ADR’s reflected an overall increase in Revenue Per Average
Room of 7%. The improving performance will undoubtedly be
interrupted in 2020 by the Covid-19 epidemic, with uncertainty
prevailing about how and when the hospitality sector can fully
recover.

Cushman & Wakefield Quarterly Report Qatar Q1 2020

 

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