Qatar Impact: Does Doha have too many hotels?

The World Cup is coming to Qatar in 2022, and the country needs a lot of hotel space to cope with the influx of people. But what happens with all those spare beds in the meantime, and after the big event? Kamahl Santamaria investigates.

I have always been fascinated by the way hotels are such a prominent part of life in Qatar. The fact that they contain top restaurants, serve alcohol, allow you to join their health and spa clubs, host major conferences – it all means they become a part of the everyday landscape.
And for a small town, Doha’s never been short on top-class hotels. Starting with the grand old lady the Sheraton, to the Middle East’s first W Hotel, and now a major St Regis development.
But there is a problem. Or at least there could well be a problem in the coming years, as dozens of new hotels come on-stream and create an oversupply of beds and facilities for what is a limited audience.

Consider that Qatar National Hotels, which was recently rebranded as Katara Hospitality, already has 4000 four and five star hotel rooms under its management across eight properties. It has another 1000 rooms planned for a major development in Lusail City. Across the whole country there are – including Katara’s – more than 100 properties, totalling 44,000 rooms.
Add in another 55,000 or so planned for the World Cup – to comply with FIFA guidelines – and you can easily see the major oversupply in the lead up to and after the World Cup.
And on top of that, there are some major factors that may work against the viability of all these hotels.

For a start, Doha is not yet a bona fide tourist town, and the big players know this. Simon Casson, General Manager of the Four Seasons Hotel Doha told TheEDGE: “The season is October to May really, and most business is done within these months…Qatar is predominantly a business, conference and meetings market. The leisure segment is small but growing.”
What is also growing is Qatar’s population, but it is really only a small proportion that will actually patronise the hotels. Restaurants, events and memberships are all pitched at those with disposable incomes – a market which will always exist – but remember the majority of Qatar’s expatriate population sends its money home as remittances. If you have too many hotel options, you are spreading a limited base pretty thin.
Still, it is not putting some of the world’s biggest hospitality names off from setting up shop here.
The newest addition to the hotel landscape is the St Regis Hotel, which opened in May. In an interview with me for Al Jazeera English, Frits van Paasschen – the president of its parent company Starwood Hotels and Resorts – said: “When we open a hotel, we open it with an eye towards the next 20, 30 or 40 years… when a market is growing this fast, will there be fits and starts in terms of supply and demand? – absolutely. Over the long term am I concerned about it? – absolutely not.”

Over at the Four Seasons, Simon Casson thinks survival in a crowded marketplace is about trusting what you do: “Back in 2005, when we opened the Four Seasons, we quickly assumed the leadership position in RevPAR (revenue per available room) and have not relinquished it since. This past performance is probably the surest indicator of future performance. So, concerned, yes, as the supply is disproportionate to the demand…worried, not so much, based on the confidence I and our guests have in our product and services.”

In the end, those of us who have been here for five or more years know how much the country has grown. It has probably surprised most of us too. So perhaps it is not beyond the realm of possibility that Doha will need a large hospitality sector, particularly with the strain we already see on hotel rooms during major conferences.

It seems new hotels are entering the market with a long-term view to success. What is less certain is whether the more difficult short-to-medium term will not prove their downfall first.
Kamahl Santamaria is a Doha-based news anchor with Al Jazeera English and host of the channel’s business and economics programme Counting the Cost.

This article first appeared in TheEDGE 4.6, June 2012.


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