Economic Update

Published 22 Jul 2010

When Doha’s latest five-star hotel opened on April 23, the event caused many in Qatar to reflect on the sector’s demand and supply conundrum – a mismatch that saw room prices rise by as much as 40% last year.

The Doha Four Seasons brings together the international chain and hotel owner Sheikh Hamad bin Jassem bin Jabor Al Thani, Qatar’s first deputy premier and foreign minister.

Explaining the price hikes, Simon Casson, general manager of the Four Seasons, told the press at the opening that “Demand for hotel rooms in Doha is now relatively higher than in earlier years due to the large number of events that are being held in the country.”

The total number of hotel rooms at the end of 2003 stood at 5266 across all classifications of hotel, from one to five star. Despite there being only four five-star hotels, compared to seven four-star and 10 three-star, the luxury hotels have almost as many rooms as the two lower categories put together, at 1265. This is due to the size of the facilities, with the newer, more luxurious hotels mostly built more recently with a view to cashing in on the increasing numbers of visitors coming to Qatar for business.

Now, with more conferences, more businesses moving to town and more lay-overs than ever before, many have been eagerly anticipating the opening of new hotels to take some of this excess capacity.

Current plans from the Qatar Tourism Authority (QTA) aim at a total of 7000 hotel rooms by mid 2006, and 10,000 by 2010 – with some 45 hotels expected to be up and running by then.

The Four Seasons will challenge the only other international luxury hotel brand in town, the Ritz-Carlton, with Casson announcing that to mark the opening, the hotel would make an introductory offer, pricing its rooms at QR900 ($247) and upwards.

However, with prices predicted to rise further over the coming year, it is hoped that competition will eventually cool the market a little as more hotels are built. The high levels of liquidity in the region make financing large projects relatively cheap, and when this is coupled with the obvious lack of hotels in Qatar, there is a strong likelihood that the QTA’s targets will be reached.

The four seasons itself brings an additional 235 rooms on its 18 floors. The development also comprises two serviced apartment towers, 20 colonial-style beachfront townhouses, an office tower and a 100-berth marina.

Meanwhile, the existing Ramada Hotel has plans for a 237-room extension which will also have six new restaurants and two new bars.

At the same time, Marriott International has plans to add to its property portfolio in Doha as well. The brand currently has one property in the capital, but will add three new hotels under a management agreement reached with Al Rayan Tourism Investment Company, a subsidiary of Faisal bin Qassim Al Thani and Sons Holding Company. The new facilities will include a 250-room hotel branded under Marriott’s Renaissance label, a 200-room hotel branded under their Courtyard label and a 120-unit property under Marriott Executive apartments, all planned to open in 2007.

Also being developed by Al Rayan Tourism Investment Company is a property under the Rotana brand, which it is hoped will be open in time for the 2006 Asian Games and add 400 rooms to Doha’s capacity.

International brand Shangri La also hopes to open a property in time for the Games, with a planned hotel expected to comprise 250 guest rooms and 60 apartments over 35 stories.

The extensive and luxurious Villagio mall being developed by Business Trading Company will also contain a five-star hotel property. Although no operators have signed yet, there is apparently some interest, with plans to offer an ecologically sound “ecotel” concept to guests.

The facility will have between 250 and 300 rooms with its own direct access as well as access straight into to the mall. Its convenient location right next door to the new Khalifa stadium is expected to make it a popular venue for guests during the 2006 Asian Games.

Not wanting to miss out on a slice of the pie, Hilton Group also plan to open a property in 2006. The brand has been conspicuously absent from Doha thus far, but when open the new hotel will have 350 rooms for its guests and also promises extensive leisure, fitness and recreational facilities.

There is however some worry that the hotels being built will come in “plain vanilla” format – in other words, they will offer the amenities of a standard five-star hotel but not develop the kind of associated resorts and ancillary facilities that might attract visitors back to Qatar again.

However, a look at current facilities provides one answer to this concern. The Ritz-Carlton and Four Seasons both have luxurious beachfront and spa facilities that some feel give the properties the feel of a resort.

Further amenities are on their way too, with the al-Fareej Resort beginning construction this year and hoping to attract families to its Arabian style chalets at al-Khor, around 40 km north of Doha. Another luxury resort, the al-Mafjar, is planned for closer to the capital, with this also starting construction this year and built around a lagoon.

With demand continuing to be high as more and more visitors come to Qatar, primarily for business, but also for the Asian Games, there is not expected to be any let up in the market for hotel rooms. Yet as more and more projects are completed, the market will cool – and beyond 2006, there will surely be more room at the inn.