Hotel owners set to see rising profits despite downturn

Increasing numbers of travellers from newer source markets like India, China, Far East and Saudi Arabia will eventually allow a return to growth in the GCC’s large hotel industry, according to industry experts — but only after a tough period ahead.

According to Alpen Capital Hospitality Report, the GCC’s hospitality market is expected to grow at a 7.6 per cent CAGR from an estimated $25.4 billion in 2015 to $36.7 billion in 2020. RevPAR in the UAE is anticipated to rise at an annual average of 1.8 per cent to reach $143 by 2020. Despite a challenging period last year and a weak average rate environment in 2017, the market is likely to recover in the long-term, driven by rise in tourist arrivals stemming from upcoming mega events and government efforts.

Key industry players, including hotel owners, developers and investors, will convene on February 6 & 7 in Abu Dhabi at the Gulf Indian Ocean Hotel Investors’ Summit (GIOHIS 2017) to hear from around 90 speakers and discuss the challenges and opportunities presented by the evolving hotel industry, including the rise of the mega-travel companies, new and fast-rising hotel real estate companies and changes in the power structure of the industry.

“Diversification in new source markets will eventually allow a recovery in hospitality industry performance levels as emerging inbound markets gain traction” says Simon Allison, CEO of HOFTEL, leading association of hotel property investors and organiser of GIOHIS 2017.

Marko Vucinic, SVP MENA, Hotels and Hospitality Group, JLL MENA agrees, noting that: “India is now Dubai’s first source market and countries such as China are targeted by Department of Tourism and Commerce Marketing in their campaigns and actions”.

Simon notes that HOFTEL’s owner members are all concerned about the long-term trends in the sector, where the large hotel brands are consolidating into giant travel companies to combat the marketing power of the online travel agents, who are meanwhile strengthening their grip on the online booking market.