Quarterly Report Qatar Q3 2022: Hospitality Market Overview
Hotel occupancy reduces in Q3 ahead of the surge in demand for the FIFA World Cup in November
In August 2022, the supply of hotel keys in Qatar reached 30,847, of which 75% are hotel rooms and 25% are hotel apartments. Of the available hotel rooms, 65% are classed as 5-star, with less than 10% classed as 3-star or below.
As the FIFA World Cup in November 2022 approaches, we expect new supply to accelerate. Despite expectations of a sizable number of new hotels opening earlier in the year, the supply of hotel keys only increased by 5% year-on-year by August, which highlights the delays experienced in the construction sector since the outbreak of COVID-19 in 2020.
Hotels and serviced apartments are expected to deliver approximately 37,000 keys, or 45,000 rooms in time for the World Cup. Demand for World Cup accommodation will dominate the market in the coming months. The Supreme Committee for Delivery and Legacy has reserved 80% of overall hotel supply for the tournament; however, any unrequired supply is expected to be returned to hotels in early October, freeing up rooms for the wider market.
According to the latest figures released by the National Tourism Council in September, year-to-date occupancy for the hotel sector has been 57%, with Average Daily Rates recorded at QAR 422. August reflected a slightly reduced performance of 54% and QAR 395, which is typical during the summer months. August’s performance metrics highlights the fact that the World Cup effect has not yet impacted the hotel sector; however dramatic increases are expected throughout Q4.
Visitor numbers to Qatar continue to recover in 2022 following the impact of COVID-19 on the tourism sector. Year-to-date arrivals had increased by 67.4% on 2021; although, arrivals remain significantly down on pre-pandemic levels. Estimates of more than 1 million people arriving in Qatar during the FIFA World Cup will ensure that tourist numbers reach unprecedented levels and ensure a boost to annual occupancy and hotel revenues for the year.
A recent report by the World Travel and Tourism Council stated that travel and tourism generated QAR 67 billion in 2021, which represented 10.3% of the nation’s GDP. The FIFA World Cup tournament will provide Qatar with an unprecedented opportunity to drive tourism revenues and promote Qatar’s tourism sector. We expect tourism from global markets to grow significantly in the next five years, while the return of the Saudi market will also boost tourist arrivals. Robust growth in tourism numbers will be required in the coming years to support occupancy rates and revenues as supply continues to grow.
By the end of August, Saudi Arabia represented the largest source market for tourists to Qatar (294k), surpassing India, which had represented the highest source market since the introduction of the blockade in 2017.