Qatar’s government has pursued an intensive national economic diversification strategy over the last two decades, aiming to leverage oil and gas revenues as it builds a broader economic base. In line with Qatar National Vision 2030 (QNV 2030) and the National Development Strategy 2011-16, the government has prioritised tourism as one of the key sector for future growth. Qatar’s location on the Arabian Peninsula gives it an important advantage, offering visitors year-round sunshine a short flight away from major markets in the Middle East, North Africa, Asia and Europe.
RAPID EXPANSION: The last decade has seen a rapid expansion in the number of hotels and other tourism facilities in Qatar, as the state has invested in transforming the country into a luxury, sports and business destination. Retail attractions like malls and luxury outlets have broadened the appeal of Qatar’s tourism market while investments in convention centres and other exhibition spaces have positioned the country as a meeting ground for businesses. Qatar has also built landmark property developments, such as The Pearl-Qatar, turning the international spotlight on the country.
The FIFA World Cup, to be held in Qatar in 2022, has ensured this spotlight remains firmly focused on the Gulf state. The tournament is expected to give Qatar’s tourism sector a major boost, drawing additional visitors into the country and providing a clear timeline for the development of projects across the country. However, the tournament also poses some challenges for stakeholders in Qatar’s tourism sector, namely with regards to whether the country can generate sufficient demand to sustain the infrastructure that is developed in the run-up to the tournament. However, the government is tackling these challenges by outlining an ambitious vision and development strategy for Qatar’s tourism sector that looks far beyond 2022.
NATIONAL TOURISM STRATEGY: 2014 marked a major milestone as the government, led by the Qatar Tourism Authority (QTA), unveiled the Qatar National Tourism Sector Strategy 2030, which aims to develop Qatar into a “world-class hub with deep cultural roots”. The strategy consolidates the progress of the last two decades in infrastructure and outlines a plan to develop cultural offerings, sporting events, business and conference facilities, and leisure travel opportunities. Supported by a $45bn investment plan, the new strategy is expected to help expand the economy, grow the number of businesses, and encourage entrepreneurship.
The Qatar National Tourism Sector Strategy 2030 was drawn up in line with four guiding principles that align with the QNV 2030 and the National Development Strategy 2011-16. These include: fitting in with local traditions and values; contributing to the national agenda of economic and social development; creating a positive economic impact; and ensuring environmental sustainability. The strategy has set out an ambitious roadmap with the goal of attracting 7m visitors to Qatar from all over the world. In 2014, Qatar saw 2.83m visitor arrivals, an increase of 8.2% on 2013. Around 1.12m of these visitors were from elsewhere in the GCC.
Diversifying the current visitor base is central to Qatar’s tourism strategy. According to the sector strategy, Qatar will increase the share of non-GCC tourists from 30% of all arrivals in 2012 to an estimated 64% by 2030. One way to achieve this goal will be to increase the role of leisure tourism. In 2014, 69.9% of all tourists travelled to the country for business purposes while 30.1% came for leisure. However, by 2030, it is hoped that 64% of all non-GCC tourists will visit Qatar for leisure, influencing the number of days visitors spend in the country and the amount of money they spend.
In 2014 tourists stayed an average of 3.5 days in Qatar. This is expected to increase to over 4.3 days per visit by 2030. Tourist expenditures, which totalled around $8bn in 2013, are expected to increase to over $10.7bn by 2030. This will impact the balance of payments, which is currently negative with outgoing tourism expenditures surpassing incoming revenues by $400m.
By 2030 the government estimates that incoming receipts will exceed outgoing expenditures by $7.4bn.
Enhancing domestic tourism will be a key focus going forward. Qatari tourists tend to be wealthy and often travel abroad. The new strategy will seek to attract some of these travellers to domestic sights and facilities. The government has therefore set itself a target of increasing the number of domestic tourist trips from an estimated 1.3m in 2012 to almost 2.5m in 2030.
The strategy outlines specific performance indicators that include increasing tourism’s direct impact on national GDP from 1.8% of GDP in 2013 to over 3.1% by 2030. When implemented, the strategy will support national employment goals by generating at least 127,000 jobs in 2030, representing a 500% increase from the baseline of 28,000 jobs in 2013.
STRATEGIC THRUST: The tourism sector strategy outlines four broad strategic thrusts that will help achieve the targets outlined above. The first is to improve the governance of the sector by setting into motion key policy and regulatory reforms and to address “sector enablers” that will spur growth. These include encouraging investments in tourism, with a specific focus on promoting greater foreign investment in the sector. Qatar has already eased restrictions on foreign ownership in the tourism sector since 2000, and will support the sector further with a number of reforms, including the guidelines for public-private partnerships and visa requirements for tourists. The government is also expected to implement a number of programmes that are a prerequisite for attracting more tourists, including developing business-related tourism strategies, developing research and statistics systems and analytics, and expanding tourism-related infrastructure.
The second strategic thrust of the tourism strategy is to implement programmes to build greater capacity within the tourism sector. This includes building up institutional strength in departments such as the QTA, so as to develop its strategic planning capabilities, as well as strengthening human resources to implement the mandate. The strategy also calls for attracting highly skilled and experienced talent from abroad to supplement Qatar’s local human resources and to help transfer knowledge and expertise. The third pillar of the sector strategy is to diversify Qatar’s current overall tourism portfolio. The tourism strategy has identified several areas that the country will need to concentrate on if it is to capitalise on untapped opportunities.
Until recently, the tourism sector consisted predominantly of business travellers who were generally in the country to support government-related projects or investments. The sector strategy seeks to shift this emphasis, for example by showcasing the country’s culture and heritage; developing greater urban attractions; enhancing the meetings, incentives, conferences and exhibitions (MICE) market; promoting sports and lifestyle activities; as well as further developing the education sector. The fourth pillar of the sector strategy, consists of using a range of products and services to diversify the mix of tourists. Priority segments identified in the strategy include Arab tourists seeking luxury offerings, Arab families, wealthy international tourists, travellers seeking to explore new cultures, and budget-conscious travellers that are still looking for higherend offerings, as well as business travellers.
FINANCING THE STRATEGY: The government and the private sector are expected to invest over $45bn to implement the country’s National Tourism Sector Strategy. The strategy calls for spending between $11bn and $13bn to develop products and services, $ 13bn16bn to build hotels and resorts; and $14bn-16bn on other services. The scale of the projected investments do not include undertakings on infrastructure such as the rail and metro projects, roads and bridges, offices and other buildings, the air and sea ports, and the stadiums being built for the World Cup, all of which are critical to growth in Qatar’s tourism industry. Using current GDP figures, this expenditure represents an annual investment of approximately 1.5% of GDP until 2030.
Within its projected budget, the QTA has outlined specific projects and investments to diversify the products and services in the tourism portfolio and develop tourism-related infrastructure. This includes investing $5.7bn to preserve and promote the country’s cultural heritage; $2.7bn to upgrade urban attractions; $1.3bn to develop convention centres and other MICE infrastructure; $200m for tourism-related sports infrastructure; $100m to improve beach resorts and luxury cruise facilities; $1bn to develop health and wellness resorts; $700m to spend on eco-tourism camping and desert activities; and $100m on putting together tourism-related education programmes. Investments in each of these segments will include private sector contributions.
INFRASTRUCTURE: While the Tourism Sector Strategy 2030 outlines a path forward for the sector, Qatar’s tourism industry has been built on an extensive development programme across a number of diverse sectors. This includes building a robust infrastructure network to support the sector’s growth, for instance the Qatar Rail Development Programme.
The new Hamad International Airport forms the infrastructure backbone for the tourism industry. The airport opened in May 2014, expanding Qatar’s airport capacity from 9m passengers a year to over 30m under the first phase of development. This is expected to rise to 50m passengers each year when the airport is fully operational. The airport includes 300,000 sq feet of retail space, two five-star transfer hotels with 100 rooms each, a health spa, and parking for over 3400 cars. The total investment in developing the airport has been estimated to be around $15.5bn. According to the airport, passenger traffic rose 13% in 2014, with 26.3m passengers using the facility compared to 23.2m at the former Doha International Airport in 2013.
The new airport serves over 30 airlines, connecting the country to a total of six continents. It has also been a boon for the country’s national carrier, Qatar Airways. The company has grown rapidly since its establishment in 1997 and currently serves 144 destinations with 136 aircraft and 35,000 staff worldwide. The company has plans to expand further afield with more than 340 aircraft on order worth a total of over $70bn.
RETAIL TOURISM: The tourism sector is also benefitting from an expansion in retail offerings. The latest DTZ Property Times Report estimates that there are currently a total of 13 malls in Qatar with a total of 590,000 sq metres of retail space. City Center and Villagio malls are amongst Qatar’s most popular. Villagio alone reports receiving an average of 42,000 visitors each day with a footfall of over 1.2m people every month The mall taps into Qatar’s significant luxury segment, including features such as indoor Venetian canals and gondola rides and a number of luxury brands, including Louis Vuitton, Christian Dior, Gucci, Prada and Dolce & Gabbana. Retailers are banking on increasing demand going forward with 14 new malls in the pipeline. These include the QR6bn ($1.64bn) Doha Festival City, which is expected to open in September 2016, as well as the QR4bn ($1.1bn) Mall of Qatar, which is expected to open in the first quarter of 2016.
Qatar Development Bank (QDB) and the QTA are also supporting the growth of small and medium-sized enterprises (SMEs) in Qatar’s tourism sector. For example, QDB has launched a programme in collaboration with the tourism authority to finance a number of projects by SMEs. The pipeline includes a luxury dhow dining cruise, a luxury coach and 4×4 leasing company.
MICE SECTOR: Qatar has also been growing its business-related tourism offerings. The MICE sector has grown significantly since Qatar Foundation opened the Qatar National Convention Centre (QNCC) near its Education City campus on Doha’s outskirts.
QNCC is housed in a structure inspired by Qatar’s native Sidra tree, and was the first building in the country to receive the US Green Building Council’s leadership in energy and environmental design certification for its energy-saving design. The facility offers theatres, more than 52 meeting rooms and in excess of 40,000 sq metres of exhibition space.
QNCC has attracted a number of events to Doha. The World Petroleum Congress in 2011 was one of the first major events at the centre, but it was the UN Climate Change Conference in 2012 that placed the convention space on the radar for the MICE segment. The event is estimated to have attracted over 10,000 visitors. Since opening, QNCC has hosted 347 events with more than 197,000 delegates, according to Deloitte’s Middle East Hotel Market Intelligence Report 2014.
Revenues as of December 2012 totalled QR283m ($77.57m), according to QNCC. The Doha Exhibition Centre offers 15,000 sq metres of space in Doha that is targeted towards exhibitions and other smaller events. Adding to this portfolio of products that support the MICE segment, Qatar is nearing completion on the new Doha Exhibition and Convention Centre (DECC).
The 90,689-sq-metre venue is being developed by Qatari Diar in the capital’s West Bay area. The exhibition centre is set to feature a multi-function hall for conventions, parking space for up to 5000 vehicles, a retail area and a connection to the Sheraton Park through an underground tunnel.
HOUSING TOURISTS: Tourist arrivals in Qatar grew by 13.42% between 2012 and 2013, according to the QTA. Visitors from the GCC topped 1m in 2013, with Saudi Arabia accounting for more than 673,000 visitors alone and the UAE bringing in another 123,000 visitors. Tourists from these countries form a critical target market because of their proximity and spending power.
Indeed, the country has invested billions of dollars to develop a range of luxury hotels catering this segment. Data from the QTA indicates that there were 124 hotels and serviced apartments under construction as of 2013. Once they are completed, the 75 new hotels will add 15,713 rooms and the 49 new hotel apartments will add over 5581 rooms to Qatar’s hotel stock.
The hotels will add to Qatar’s existing stock of 127 hotels and serviced apartments. According to the First Qatar Real Estate Development Company, these include 34 five-star hotels with 7511 rooms, 22 four-star properties with 4380 rooms, 24 three-star properties with 1747 rooms, and 14 one- and two-star properties with 486 rooms. Moreover, there are 33 serviced apartments with 2879 rooms. The real estate development company reports that the majority of the four- and five-star properties are in Doha, accounting for 71% of the total hotel supply in the capital city. The luxury hotels segment is booming, posting growth of over 19% year-on-year between 2010 and 2013.
Occupancy and average room rates continued growing between 2012 and 2013, supporting the case for developing new properties. The tourism authority reports that total revenue per available room increased by 8.16% between the two years, with the average room rate per day increasing from QR372 ($102) in 2012 to QR399 ($109) in 2013. Total earnings in the sector topped QR3.6bn ($986.76m) in 2013. According to Deloitte’s Middle East Hotel Market Intelligence Report 2014, the supply of luxury and higher-end hotels has grown the fastest over the last five years. The luxury segment alone grew by 75% between 2009 and August 2014. This trend is set to continue in 2015, which has already witnessed the opening of two new luxury properties in Qatar. The Marsa Malaz Kempinski, which opened in January 2015, will add 281 rooms, while the Banana Island Resort Doha by Anantara, which also opened in January, will add another 141 rooms to Qatar’s luxury hotel segment.
CULTURAL HERITAGE: Qatar is further seeking to establish itself as the Gulf’s most important cultural centre. The National Development Strategy 2011-16 has recognised the value of protecting and promoting cultural heritage to support its broader tourism strategy.
The opening of the Museum of Islamic Art in 2008 was one of the first major steps towards showcasing this heritage. The museum’s building, which was developed on a purpose-built island on Doha’s corniche, was a landmark design that underlined Qatar’s growing emphasis on showcasing its cultural heritage. Qatar Foundation has played a major role in working to preserve Qatar’s distinctive cultural traditions for future generations. The Education City campus, for example, houses Qatar’s first museum of modern art, Mathaf. The Qatar National Museum, which is currently under construction, will further add to the number of tourist offerings in the country (see analysis).
Other major cultural sites include Souq Waqif, which is Doha’s traditional market place, and Katara Cultural Village. Souq Waqif dates back to when Doha was a fishing and trading centre. The traditional market fell into disrepair as modern shopping centres rose across the city. The government invested in restoring the market place by tearing down new developments within it and rebuilding the site using traditional methods.
As a result of this redevelopment, the marketplace now attracts thousands of visitors to its labyrinth of stores that sell everything from spices to falcons. It is also starting to attract other businesses, including boutique luxury hotels and art studios.
ARTS & CRAFTS: In 2011 the government opened Katara, which is branded as a cultural village that serves as a centre for the arts, music, and literature in Qatar. Katara has hosted a number of events that highlight Qatar’s cultural traditions, including festivals, exhibitions, forums and other cultural events. The village is built on over 1 sq km and includes an open amphitheatre, an opera house, a theatre, an arts and crafts souk, and various international restaurants.
At present, Katara has been developing Phase II and III of the Katara Cultural Village. Phase II will consist of a shopping centre and a specialty children’s mall with the goal of attracting a greater number of families and children to the Katara development. Phase III will see the development of Katara Hills, which will be a residential area consisting of 140 villas and 257 apartments. The necessary infrastructure for the project has been put into place, and construction is expected to take around a year once the project commences.
ARCHAEOLOGICAL SITES: Qatar’s archaeological and heritage sites also offer significant potential for the tourism industry. These sites date back to the 17th century and include ruins, forts, palaces, houses, castles and towers. Many of these sites are not currently being protected or developed. According to the National Development Strategy, more than 200 archaeological sites in Qatar have not been registered, are in danger of deteriorating and require repair work. As such, the national strategy outlines a number of initiatives to safeguard Qatar’s heritage and to strengthen laws and regulations that support cultural preservation.
The strategy also calls for renewed efforts to promote visits to historical sites by developing a promotional plan that would enhance international recognition, specifically through the UNESCO World Heritage list. This strategy is already bearing fruit as UNESCO first included the Al Zubarah Archaeological Site on its World Heritage list in 2013. Al Zubarah is rooted in Qatar’s history as a pearling and trading centre in the late 18th and early 19th centuries. The walled coastal town was destroyed in 1811 and abandoned in the early 1900s.
In 2009 Qatar Museums launched the Qatar Islamic Archaeology and Heritage Project in collaboration with the University of Copenhagen to research and preserve the Al Zubarah ruins. Building on this momentum, Qatar also hosted the 38th session of the World Heritage Committee in Doha in June 2014, where a special issue of the World Heritage Magazine was issued.
The magazine, which was dedicated to the Al Zubarah Archaeological Site, highlighted other key sites in Qatar, including the old palace in Doha and the rock carvings of Qatar and Khor Al-Adaid Nature Reserve. Developing Qatar’s heritage would offer yet another avenue for growth in the sector. There are currently six protected areas that cover 22% of Qatar’s land surface, according to the Ministry of Development Planning & Statistics, giving Qatar the opportunity to develop national parks that promote sustainable ecotourism.
SPORTING EVENTS: The most important event with regards to Qatar’s tourism strategy will undoubtedly be the FIFA World Cup in 2022. Using the global sporting event as an anchor, the Gulf country is developing a comprehensive sports-related tourism strategy. This goes back to 2006, when Doha had successfully hosted the Asian Games. Since then, the country has hosted the 2014 Squash World Open, the 2014 World Nineball Championship for billiards, and most recently, the 2015 Handball World Championships, organised by the International Handball Federation.
The Aspire Zone complex is one of the major sites that have been developed to support sports tourism. The Aspire Dome, which is the centrepiece of the development, is currently the world’s largest indoor sports facility. The sports complex boasts world-class sports training facilities and is managed by the Aspire Zone Foundation. The quality of the facilities led the English Premier League club, Manchester United, to use the complex for training in 2010 and 2013. Aspire Zone also hosted winter training camps of European clubs including Paris Saint-Germain, Bayern Munich and Schalke 04. Qatar’s effort in developing sports tourism was recognised by the World Travel Awards in 2013 with the award for the World’s Leading Sports Tourism Destination. The country beat other contenders that included established destinations such as Dubai, Durban, London, Melbourne and Tokyo.
Indeed, winning the bid in 2010 to host the 2022 FIFA World Cup gave Qatar’s tourism segment a major boost: according to Bloomberg, the government is expected to spend as much as $220bn in the build-up to the global event in 2022. This figure includes a number of infrastructure projects not directly related to the World Cup, including $35bn on a rail and metro rail project, $7bn on the seaport, $15.5bn on the new airport.
According to the Ministry of Business and Trade, total expenditure on the stadiums alone is expected to come to around $4bn, while other costs will include accommodation and other related services. The government has awarded HBK Contracting Company the contract to start work on the proposed Al Wakrah stadium, which will be the first to be completed. The 40,000-seat stadium will serve as the base for Al Wakrah Sports Club.
Hosting the 2022 FIFA World Cup will underline Qatar’s significant public and private investments in world football. In 2010 Qatar Foundation signed a $231.27m sponsorship deal with FC Barcelona, which is one of the biggest football clubs in the world. Various Qatari interests have also acquired stakes in major European football teams in recent years. These have included Málaga, which was bought for $48.97m in 2010, as well as Paris Saint-Germain, which was bought by Qatar Sports Investments the following year.
LOOKING ABROAD: Qatar is increasingly eyeing opportunities to invest in foreign tourism markets. Qatari Diar, the property arm of the Qatar Investment Authority – the country’s sovereign wealth fund – has signed deals to develop tourism projects in a range of countries, including Tunisia, Oman and Egypt. The company’s first project is the ongoing development of Lusail City in Doha. Building on its success, the company is building two major projects in Egypt, including the St. Regis Hotel Tower, which will be Egypt’s tallest building standing at 180 metres tall, and a 43,000-sq-metre resort in Sharm El Sheikh.
In 2012 the company signed a deal to develop a luxury desert resort in Tawzar, which is known for its palm tree fields. The resort is scheduled to open in 2015. The real estate company also signed an agreement with the Ministry of Tourism in November 2014 to develop the Ras al Hadd project, in Sur city.
OUTLOOK: The number of travellers in the Middle East alone more than doubled between 2000 and 2010, growing from 24.1m to 60.3m, according to the UN World Travel Organisation. The development of a world-class airport and other infrastructure projects helped to ensure a steady supply of tourists to the country.
Qatar’s ambitions of diversifying the economy away from its oil and gas revenues are gradually taking hold.
According to the World Travel & Tourism Council (WTTC), the direct contribution of the tourism sector was QR13.6bn ($3.73bn), or 1.8% of total GDP, while the total contribution topped QR50.6bn ($13.87bn), or 6.6% of GDP, in 2013. This is forecast to rise by 9.1% in 2014, and further by 4.5% each year from 2014 to 2024. The sector also accounts for 5.4% of total employment, or 86,500 jobs, in 2013.
These statistics rest on the back of increased public investment in the sector: for example, the WTTC estimates total investment in the sector in 2013 was QR6.2bn ($1.7bn). This is set to grow significantly as the government implements the Qatar National Tourism Sector Strategy 2030. These steps will include reforms so as to facilitate both private sector and foreign participation in the sector. Therefore, the 15-year strategy – supported with a $45bn investment plan to spur growth across the sector – further underlines the government’s ambition for the sector going forward.
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