Dubai: Cash for new hotel projects in the Gulf Cooperation Council is available again with spending power increasing 11.4 per cent since the beginning of 2010, according to Proleads.
The research company closely follows projects under construction in the Gulf and expects $1.17 billion to be spent on hotel projects this year.
Looking forward, the research indicates that $7.8 billion will be spent over the next three years on projects to be completed by 2013. Earlier this year this figure was pegged at $7 billion.
Ray Tinston, sales director at The Hotel Show, which starts tomorrow, said the figures proved that ambition and liquidity were present in the GCC.
"At a time when the US and countries in Europe are preparing stringent austerity measures, to reduce their budget deficits and repay billions in loans, the Middle East region is powering ahead," he added.
The Gulf region is weathering the global downturn much better than western countries. And the figures bode well considering that hospitality consultant, Viability, recently established that about 20 per cent of hotel projects in the GCC are either on hold or cancelled.
The Proleads report attributes the recent surge in spending to the announcement of new hotel developments in Qatar and Saudi Arabia in particular.
According to TRI Hospitality Consulting, the GGC's accumulative pipeline will bring another 420,000 rooms by 2014 to the market.
Qatar is to spend over $900 million by 2013 taking a 7.7 per cent share or around 17,000 rooms of the pie. Saudi Arabia has a bigger share, 12.8 per cent, or 220,000 rooms.
Oman, which is only taking 4.9 per cent of the pie, or 14,800 rooms, by 2014, according to TRI, is maybe surprisingly spending more, $269.2 million, than Saudi Arabia's $245.5 million this year, Proleads research estimated.
This may well have to do with the fact that Oman's pipeline is more measured and money allocated this year could cover most of the projects envisaged for years to come. Indeed Proleads' three year expenditure forecast for Oman is $300 million.
However, Sven Gade, director and head of consulting at PKF — The Consulting House, said that whilst there might be a number of projects projected as starting in one year, one would have to wait and see whether they actually will or the intent may be dispersed further.
"Oman has deliberately slowed down a number of ITC [integrated tourism complex] projects during the financial crisis which are now coming back because the 2009 tourism performance was good. Hence, the pipeline is starting to move," he added.
Oman has several large scale mixed-use projects under construction or on the drawing board, including The Wave in Muscat, Jebel Sifah and Salalah to name a few.
Saudi Arabia is expected to spend $1.74 billion on projects to be completed by 2013. "This huge country with multiple destinations not only needs to still address significant pent up demand, but is also seeing a significant development in the three star and budget segments," said Gade.
Bahrain has 3.7 per cent or 12,500 rooms of the hotel pie, Kuwait has 3.4 per cent or 9,500 rooms. However, according to Proleads, Bahrain is expected to spend $460 million, five times as much as Kuwait's $90 million, on hotel projects by 2013.
The ‘disconnect' between spending and numbers of rooms may be explained by Bahrain's master-planned projects focusing on high-end. Kuwait is building more economy hotels, thus costing less money per room.
"The disparity between Bahrain and Kuwait may be that the rooms cited in Kuwait include renovations or upgrades as well," Gade said.
The UAE is keeping the lion's share at 70.6 per cent or 148,000 rooms of the total GCC hotel pipeline, according to TRI figures. The UAE is spending about 10 per cent ($463 million) of the $4.34 billion, which Proleads estimated it will spend to complete projects by 2013.
Expenditure per room
- UAE: Around $32,000 per room
- Oman: Around $21,400 per room
- Qatar: Around $56,000 per room
- Kuwait: Around $10,000 per room
- Bahrain: Around $40,000 per room
- Saudi Arabia: Around $9,000 per room
— Figures based on estimated completion of estimated pipeline (TRI Hospitality Consulting) and estimated expenditure (Proleads) by 2013
