Qatar caters to the upper end of the tourism market

Qatar’s economic diversification plans combined with robust population growth require the construction of additional infrastructure, including an extensive hotel network that will support the country’s burgeoning travel market. The country’s tourism authority anticipates a rapid increase in the number of visitors in the build up to the 2022 FIFA World Cup and is also actively supporting the development of a number of hotel properties. Catering to demand from Qatar’s wealthy clientele, the majority of these developments are four-and five-star luxury offerings that are geared towards serving the upper end of the market.

TOTAL HOTEL STOCK: The total stock of existing hotel rooms points to Qatar’s current strategy of establishing itself as an ideal destination for luxury tourism. As of 2014, Qatar had already developed 95 hotels across all categories, according to Al Asmakh Real Estate Development’s first quarter report for 2014. These establishments provided an estimated 16,786 rooms and were also supplemented by an additional 4200 rooms offered by luxury and non-luxury serviced apartments.

Out of this total supply, the luxury sector accounted for 57 hotels, representing 60% of the total number, and 14,173 rooms, representing 67% of the total stock available in the country, according to the real estate developer’s report. In total, according to real estate company DTZ, some 125 hotel establishments are currently under construction in Qatar, which, on completion, will increase the total level of stock to around 35,000 room keys. "The hospitality and hotel construction segment is extremely promising for the future. Local contractors will have a large share of this market given that they are qualified and experienced in this area," Anwar Al Qawasmi, the president of Ramco Trading & Contracting, told OBG. “Several new projects are being developed in Lusail, West Bay and across the city that offer opportunities for domestic contractors to participate in the construction boom. Therefore, finishing the construction of a project like the Westin in the first quarter of 2015 gives us a lot of hope for the future." The majority of these offerings are located in or near the city of Doha. First Qatar Real Estate Development has reported that the luxury hotel market in Doha alone grew at a rate of 19% year-on-year between 2010 and 2013. This is in stark contrast to the stock of three-star hotels, which grew by only 3% between 2010 and 2012.

For instance, the real estate development company has estimated that the luxury market accounts for a total of 71% of the supply of hotel rooms in the capital city. The market for serviced apartments represents only a small portion of this total figure, and accounts for only 17% of the total hospitality supply in Doha according to First Qatar Real Estate Development. Of the 33 properties, which supply a total of 2879 rooms in the capital, 21% are in the luxury segment.

LUCRATIVE MARKET: Revenues of hotels operating within the luxury market in Qatar have risen as a number of new developments come on-line. As a result, the segment remains the most lucrative in Qatar, and the market for five-star hotels is currently more than three times bigger than that of four-star hotels. Illustrating this, figures from the Qatar Tourism Authority (QTA) show that revenues from Qatar’s existing five-star hotels grew by 3% between 2012 and 2013, increasing from QR2.05bn ($561.91m) in 2012 to QR2.08bn ($570.13m) in 2013. In contrast, four-star hotel revenues totalled only QR740m ($202.83m) in 2013 compared with QR718m ($196.8m) in the previous year.

2015 has already witnessed the launch of two of Qatar’s newest hotel resorts. The Marsa Malaz Kempinski, which welcomed its first guests in January 2015, is being branded as an ultra-luxury resort that will offer premium services to its clientele. Alfardan Hospitality partnered with Kempinski Hotels to bring the international luxury hotel brand to Qatar. The property is located on a dedicated man-made island on The Pearl that spans over 500,000 sq feet. The hotel will add an additional 281 rooms, including 73 suites with a 24-hour butler service, to the total stock available in Doha. The Venetian-themed hotel will include a 1300-sq-metre ballroom, 150 metres of private beach space, several outdoor swimming pools, facilities for water sports, tennis courts, and docks for yachts and boats.

The CEO of the Alfardan Group indicated that the property is in line with QTA’s tourism strategy, which seeks to position Qatar as “a world-class hub with deep cultural roots”, and with Qatar National Vision 2030 and the National Development Strategy 2011-16, both of which target the tourism sector as a key engine of growth as the country diversifies its economy. The hotel’s opening coincided with the lifting of the alcohol ban on The Pearl, which is likely to help spur newer openings on the luxury real estate development.

The Marsa Malaz Kempinski adds to the Alfardan group’s portfolio of luxury hotels in Qatar. The group opened the St. Regis Doha, its first major luxury hotel in the country, in 2012. The St. Regis Doha is located at the Al Gassar Resort in Qatar’s capital. The hotel offers 336 luxury rooms, including 70 suites and two presidential suites, which come with the hotel’s signature butler service. An Olympic-sized swimming pool, luxury beachfront cabanas, and a private beach set on 16,000 sq metres of leisure space add to its luxury offerings. The Banana Island Resort Doha by Anantara was the second luxury property to open in 2015. The 141-room luxury resort features 96 hotel rooms, 32 two-and three-bedroom poolside villas, and 11 villas built on stilts over the water. The resort has its own natural harbour with a 30-berth marina and a dive centre. Water sports, fishing trips, luxury yachts and a 100-metre long lagoon pool add to the 800-metre long private beachfront. The resort also provides access to a nine-hole putting course and a bowling alley.

LUXURY BRANDING: These developments add to Doha’s existing luxury brands in the market, such as the Ritz Carlton, Four Seasons, the W and Mövenpick (see The Guide). Following a different strategy, Al Rayyan Hospitality has introduced a number of boutique luxury hotels located in Doha’s Souq Waqif. The five-star collection of hotels includes eight luxury properties that operate under the Souq Waqif Boutique Hotels brand name. The eight hotels, named Al Mirqab, Arumaila, Al Najada, Al Jasra, Al Bidda, Musheireb and Bismillah, feature between two and 37 rooms and are designed to highlight the heritage of Doha’s souk within a modern setting. Al Rayyan Hospitality has also announced plans for two new resorts. The 362-room Hilton Salwa Beach Resort & Villas will sit on 30m sq metres of coastline in south-west Qatar and will feature a luxury hotel, two villages of family villas, a marina, yacht club, meeting and event function space, and shopping malls. Moreover, the Al Messila Resort & VIP Spa will sit on 13 ha in central Doha, and is set to feature a five-star, 120-room hotel, as well as 30 luxury villas and a spa.

According to the QTA, more than half of the new hotels planned over the next five years will be five-star properties. There are 124 planned hotel establishments in Doha alone, which will add a total of 21,294 rooms. According to First Qatar Real Estate Development, 53% of this upcoming stock is expected to be in the luxury or upmarket sector, while 26% is expected to consist of serviced apartment units.

Katara Hospitality, which was launched as Qatar National Hotels in 2003, is one of the major owners, developers and operators in the luxury hotel market. With a global portfolio of 14 hotels in operation and a further five currently under development, Katara Hospitality has also served as a platform for growth within Qatar, with seven hotels in operation and a further eight under development across the country. Hotels in operation include the Sharq Village & Spa and The Ritz-Carlton, Doha, as well as the Sheraton Doha Resort & Convention Hotel, which reopened in November 2014 following an extensive renovation. Katara Hospitality also unveiled plans in 2013 for Katara Towers, to be situated in Lusail City’s Marine District. Due to open in 2018, the towers will include a five-star hotel for business travellers, a six-star hotel targeting the luxury segment and branded apartments for permanent residents. The approximately 300,00-sq-metre complex will also feature recreational facilities, restaurants and conference space. Similarly, Al Rayyan Tourism Investment Company, established in 2003 and a subsidiary of Al Faisal Holding, owns 24 hotels worldwide, including hotels within Qatar such as the City Centre Rotana Hotel and the Doubletree by Hilton in Doha.

MARKET TRENDS: While market trends in Qatar and the rest of the GCC indicate a gap in hotels catering to increasingly price-conscious travellers, Qatar will remain focused on developing as a luxury destination. While the sheer scale and speed of development has generated significant returns, there are concerns about long-term market sustainability after the FIFA World Cup.

Even so, Qatar remains in a strong position. The Middle East has seen a growth in tourism, rising from 24m travellers in 2000 to 52m in 2013 according to the UN World Travel Organisation. These figures are set to reach 150m by 2030. The QTA has reported that GCC nationals made up 38% of the 1.42m visitors in the first half of 2014. This demonstrates Qatar’s ongoing transformation into a major luxury destination within the GCC.