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Hospitality

ValuStrat’s client portfolio includes the region’s leading hospitality investors, developers and operators. We offer a full array of valuation and strategic advisory services to our hospitality clients to meet their needs across the business cycle.

The GCC region has witnessed a spate of economic changes over the past decade. Governments across the world’s largest oil exporting region are focusing on non-oil sectors such as travel & tourism, hospitality, healthcare, education, industrial manufacturing, investments and construction to reduce reliance on their oil reserves. This has led to an aggressive investment in physical infrastructure and technology across the region. We believe that multiple factors such as the increased thrust to develop the travel & tourism sector through infrastructure development, increased bids to host global events (including sports), and government support to the private sector would continue to facilitate growth in the hospitality industry. To benefit from the impending rise in demand, domestic and foreign hotel operators are investing heavily to expand capacity. Currently, the GCC’s hotel development pipeline comprises 78,915 rooms, against a current inventory position of 377,036 rooms.

Since the lull in 2009, international tourist arrivals to the GCC region has risen consistently, benefiting from a steady recovery in the region’s economy and increased tourism promotional activities. Tourist arrivals surged significantly to 37.3 million in 2011 compared to 29.5 million in 2009. While occupancy rates have increased across the GCC region, the global economic downturn as well as the socio-political unrest in select countries of the Middle East region has dented the GCC hospitality sector’s performance on Average Daily Rate (ADR) and Revenue per available room (RevPAR). The GCC region has generally benefited from relatively strong tourist arrivals.

The outlook for the GCC region’s travel & tourism industry is positive. Hotel room supply is expected to grow in tandem with the imminent rise in demand. This along with a steady rise in occupancy and ADRs would fuel the growth in hotel room revenues. Tourist arrivals from Asian countries would be relatively higher as they continue to witness stronger growth in income levels, and facilitated further by the proliferation of budget airlines.

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