April 2011

Alpen Capital´s latest report on the GCC Hospitality Industry estimates that room revenues for the GCC hotel industry are growing at a rate of 11% from 2010. Saudi Arabia and UAE are the two biggest markets in the region with 89% share jointly.

The report also projects optimistic and pessimistic scenarios for the room revenues based on different levels of room supply and tourist arrivals and estimating that the GCC Hospitality Industry performance will stabilize at around US$ 173 during this period & average daily rate (ADR) for the region will firm up to US$ 257, while the occupancy rates will be around 67% for the same period.

The GCC Hospitality industry is currently trading at a P/E of 15x average which makes it very attractive in comparison to its global peers.

There are several factors boosting the outlook of the GCC Hospitality Industry wherein the supply side factors include, the total number of rooms expected to be added in the next four to five years and those under development & the demand estimate is based on forecasts of increase in tourist arrivals and leisure & business spending for international and regional visitors.

Secondly, the GCC region has had continued economic growth and a healthy GDP projected for the future from which the Hospitality industry will benefit as its strategic location makes it attractive to tourists from UK, Europe and the GCC itself.

The emerging sports & events based tourism as well as niche tourism offerings such as cultural & heritage tourism, and diving and wild-life oriented tourism is helping in promoting the industry.

One of the main challenges impacting the industry is the wave of political unrest and uncertainty across parts of the GCC region as well as the larger MENA region, which may negatively impact tourist arrivals. Despite these factors, the outlook for the GCC Hospitality industry remains positive for 2011 – 2015 due to the strong growth drivers.

For more details please click here to access the complete version of the GCC Hospitality Industry report.