Qatar's Hotel Occupancy, Average Daily Rate Drop in Q1 2017

Due to slowing economic activity and corporate spending, hotels in Qatar have experienced a decline in occupancy and average rates during the first quarter of 2017, a new report has revealed.

According to a market review released by Colleirs International, occupancy rates dipped 7 percent and average daily rate (ADR) went down 12 percent in Q1 2017.

The hotel market occupancy is forecasted to close at 62 percent in 2017, which is still higher than the occupancy rates in some GCC cities that are also heavily reliant on the corporate segment.

The market has seen an addition of approximately 550 keys over the last year, primarily in the five-star segment. However, no new supply was introduced in the Doha market in the first quarter of 2017.

Branded supply is expected to increase by a compounded annual growth rate (CAGR) of 19 percent from 2017 to 2019, from 13,634 hotel rooms to 19,507 hotel rooms. While the significant supply is expected to enter the five-star and four-star segments over the next few years, some delays are expected, which leaves more time for the market to absorb the new supply.

Slowing economic activity is expected to shift demand for hospitality accommodation towards hotels offering more affordable rates.

With the opening of new malls and other demand generators, Doha is expected to see growth in leisure tourism in the coming years. The gradual increase in leisure tourism over time is expected to help in diversifying the demand base for the city.

The major hospitality districts in Doha experienced a drop in occupancy and average rate during the first quarter of 2017, with hotels in West Bay and Diplomatic Area being the most resilient. West Bay Lagoon and Doha Downtown saw occupany rates slide 9 percent, while ADR for the two areas fell 16 percent and 12 percent respectively.