Backed by a coordinated government strategy and strong investments in key economic enablers such as infrastructure, Qatar’s tourism industry continues to grow at a steady clip. Since 2010 Qatar has seen arrival numbers rise over 72% to reach 2.93m in 2015. The sector’s economic contribution hit QR39.5bn ($10.8bn) in 2014, and mid-2015 estimates projected 2015 growth at 6.6%, according to the World Travel and Tourism Council (WTTC), an industry group. Foreign arrivals rose an average of 11.5% a year in 2010-15 and were up 3.7% year-on-year (y-o-y) in 2015, falling just shy of 3m visitors, according to the government agency responsible for planning, regulating and promoting the sector, Qatar Tourism Authority (QTA).
Investment Momentum
The investment surge driving this was under way well before Qatar won the right to host the 2022 FIFA World Cup in 2010. Qatar National Vision 2030 (QNV 2030), a long-term blueprint released in 2008 that envisions a “diversified economy in which the private sector plays a prominent role”, includes a project pipeline worth some $200bn. On top of rapid GDP and population growth in recent years, tourism has been boosted under the National Development Strategy (NDS) 2011-16 by large investments in transport and urban infrastructure, such as the Hamad International Airport that opened in 2014, spawning new hotels, resorts, malls and conference centres.
At the same time, the government is pushing to develop tourist attractions such as museums, theme parks, archaeological sites and sports venues. Tourism-related contracts worth more than $2.5bn were awarded in 2014, bringing the total under way to $8.48bn, according to the Middle East Economic Digest (MEED), an online regional news outfit. Significantly for tourist volumes, plans are afoot to revamp Doha Port to receive more cruise ships, which could provide a substantial boost for the industry (see analysis). Of the $29.3bn in contracts MEED reports were awarded in 2015, a great many involve tourism, opening a host of opportunities for foreign direct investment (FDI).
MEED expects another $22bn to be awarded in 2016 and a total of $135bn over 2015-20 as part of preparations for the World Cup. According to QTA, there are many sites with great potential for further development, and priority is being given to attractions that are unique to Qatar.
Organisation
QTA is responsible for planning, regulating and promoting the industry. In 2014 it released a national sector strategy, laying out goals through to 2030, and is now overseeing implementation. Given the multi-sector nature of tourism, this involves collaboration with a wide range of entities in four main categories: regulators, such as the Ministry of Culture and Sports, the General Authority of Customs and the Qatar Ports Management Company; industry bodies, such as the Hotels Association, and Qatar Chamber of Commerce and Industry; enabling entities, such as the Public Works Authority (Ashghal) and the Ministry of Development Planning and Statistics; and commercial enterprises, ranging from service providers (hotels, travel agents) to financial institutions (banks, development funds) and educational institutions (research outfits, training institutes).
QTA’s role is thus primarily advisory, supervisory and coordinative rather than executive, though its remit includes “recommending corrective measures when needed” and ensuring that all hotel establishments nationwide operate at the highest standards, while seeking to perpetuate the country’s culture. As part of its planning mandate, the authority publishes quarterly “Tourism Per formance Reports” assessing the industry’s progress toward 2030 goals, drawing on an increasingly wide range of data sources (see analysis).
Regulation
On the regulatory side, QTA publishes guidelines for compliance with the Tourism Law No. 6 of 2012 and the Exhibitions Law No. 17 of 2013, as well as on specific subjects relevant to private investors, such as the hotels grading and classification system. It is also vested with the sole authority to issue licences for tourist activities such as conducting tours, organising events, establishing hotels or operating dhows (traditional boats), many of which are open to 100% foreign investment. The Ministry of Economy and Commerce is currently developing a regulatory framework for public-private partnerships (PPPs), a model it uses in the utilities sector and is seeking to expand to other industries, including tourism. According to Simon Green of Charles Russel Speechlys, a London-based law firm, Qatar will need to execute at least 20% of planned projects through PPPs in order to meet its diversification goals.
Investors
Over the years, Qatari authorities have nurtured a favourable business climate for tourism that fares well in global indices. In the World Economic Forum’s Travel and Tourism Competitiveness Index 2015, Qatar ranked second in the MENA region, topping even first-place UAE in four out of the five “enabling environment pillars”: business environment, safety and security, health and hygiene, and human resources. It also scored well above the regional average on ICT readiness, infrastructure (air, ground, port and tourist services), environmental sustainability and government prioritisation of the industry.
Out of 141 countries covered in the index worldwide, Qatar ranked 43rd overall and 19th on price competitiveness – partly a reflection of low fuel costs in the peninsula state. Notably, it made the top 10 in 12 out of 15 ease-of-business categories, including property rights, construction permit costs, taxation levels, legal framework, dispute settlement and the effect of rules on FDI.
Numbers
The direct contribution of tourism to Qatar’s economy reached QR18.8bn ($5.2bn) in 2015, according to the WTTC’s “Economic Impact 2016” report. As a share of GDP, this came in at 2.8%, higher than in Kuwait (2.1%) but below the percentage share of neighbours such as the UAE (4.2%) and the averages for the Middle East (3%) and the world (3%). However, the industry’s contribution is forecast to rise by 4.3% in 2016 and by an average of 3.8% a year through to 2025.
In 2015 some 79,500 people were directly employed in the industry, making up some 4.7% of the total workforce. This was expected to remain steady in 2016, followed by annual rises of 0.3% through to 2026 to reach 82,000 jobs. The sector’s total employment contribution, including indirect impacts, stood at 129,000 workers in 2015 and is set to reach 146,000 by 2026.
Visitor exports, defined as all money spent in-country by foreign arrivals in a given year, generated QR34.1bn ($9.4bn), or 9.4% of total exports in 2015, up from QR23.3bn ($6.4bn) in 2014. This is set to grow by 3.2% in 2016 and by 3.3% each year to 2026, reaching QR48.6bn ($13.3bn) and 7.8% of the total, projects the WTTC. Capital investment reached QR6.5bn ($1.8bn) in 2015, and was expected to hit QR7.6bn ($2.1bn) in 2016 and QR17.3bn ($4.7bn) by 2026.
The leisure segment dominates the tourism market, accounting for 67% of travel spending (with the rest coming from business travel). According to the WTTC, this segment will expand its market share, growing by 6.8% in 2016 and then by 4.2% per year to reach QR44.9bn ($12.3bn) in 2026. Business travel, meanwhile, was expected to fall 1.7% in 2016 to QR13.4bn ($3.7bn), but then rise 2.7% per annum to reach QR17.5bn ($4.8bn) in 2026.
Tourism, though a relatively small share of Qatar’s economy, has one of the brightest growth horizons worldwide. Out of 184 countries assessed by the WTTC, tourism in Qatar ranked 127th by GDP contribution in 2015, up from 155th in 2014. For its growth forecast, it ranked 14th.
Source Markets
Qatar’s tourism sector finds a ready market in its wealthy Gulf neighbours, whose citizens can enter visa-free. Of the 2.93m visitors QTA recorded in 2015, 1.3m came from within the GCC. In 2015 these travellers were by far the fastest-growing market, up 15% on 2014, compared with 3.7% overall visitor growth. The next-largest source region, Asia, accounted for over 735,800 total visitors, dominated by India with 375,900 (a reflection of Qatar’s large foreign community from the subcontinent). The third-largest block, at 13.9% of the total, came from Europe.
The beginning of 2016 saw a slight decline in the pace of arrivals, with global economic challenges weighing on the industry worldwide. The country welcomed 822,626 visitors in the first quarter of 2016, a 2% dip on the same period of 2015, with the sharpest declines in those from Arab countries (-24%), Asia (-16%) and the Americas (-5%). As a result, hotel occupancy rates also fell, by 15 points y-o-y to 70% – a level consistent with global averages. However, QTA figures show March 2016 set a new record for arrivals, at 305,014.
Government Strategy
Recognising the sector’s potential to boost and diversify the economy, in February 2014 QTA unveiled the Qatar Tourism Sector Strategy 2030, following a nationwide consultative process which garnered input from a wide range of state agencies, civil society groups, private firms, industry professionals and journalists. In developing Qatar into “a world-class hub with deep cultural roots”, the strategy aspires to double (from 2012 levels) tourism’s contribution to 5.1% of GDP, quintuple its employment to a workforce of over 125,000 and raise annual visitor numbers from 2.3m to above 7m, thereby boosting tourist spending from $1.35bn to $10.7bn – all by 2030.
Drawing on two broader plans, QNV 2030 and NDS 2011-16, the blueprint cites four “guiding principles”: harmony with local traditions and values, alignment with the national agenda, positive impact on the economy and environmental responsibility. Achieving this vision will require some $40bn-45bn in tourism-related investment by public and private sources, according to QTA’s chief development officer, Hassan Al Ibrahim, split between $11bn-13bn for product offerings, $13bn-16bn for hotels and resort projects, and $14bn-16bn for concepts and services.
QTA’s role, the plan notes, will be to capitalise on efforts already being led by state agencies in areas like developing museums and cultural highlights, courting conventions and exhibitions, hosting international sporting events, building infrastructure and urban developments, and promoting educational opportunities. Non-state stakeholders will play a vital role as well, including through PPPs. Of the $40bn investment total, the plan lays out $11.5bn in required funds to be devoted specifically to developing tourism offerings, as well as the portions expected to come from state sources: $5.7bn for cultural offerings (75% public funding), $2.7bn for urban entertainment options (50%), $1.3bn for meetings, incentives, conferences and events, or MICE (50%), $1bn for health and wellness resorts (5%), $700m for ecotourism (25%), $200m for sports infrastructure (80%), $100m for beach resorts and luxury cruises (40%), and $100m for training facilities and programmes (50%). The plan proposes to invigorate the industry by, among other things, developing Qatar’s brand identity, enhancing visa procedures, promoting investment in tourism, producing strategies for specific segments, improving visitor relationship management and enhancing data collection. A key theme is to expand tourism by diversifying into new offerings in business, culture, health and wellness, sports, ecotourism and educational tourism.
Hotels
After two years with a relative lull in new supply, Qatar’s hospitality segment saw a large increase in stock in 2015. Some 20 new hotel establishments opened that year, increasing supply by 5000 to reach over 20,700 rooms, a 30% increase over 2014, according to QTA.
This increase is set to continue. As Qatar prepares for major events, such as the 2022 FIFA World Cup, room supply is on track to more than double with 56 hotels and 13 hotel apartment buildings planned for the next five years, bringing an additional estimated 26,650 rooms to market. Of these, 20 properties are due to open in 2016, increasing room supply by 4000.
Hotel performance in 2015 showed prices, earnings and occupancy all down for the year as new stock came on-line and competition tightened. Full-year data from QTA put the overall occupancy rate at 70.7% compared to 73.1% in 2014, though it rose in the four-star segment by 0.7 points to 76.5%. Across the entire hotel segment, average room rates (ARRs) fell by 5.7% y-o-y, while revenue per available room (RevPAR) dropped by 8.8%.
A more detailed look shows more nuance, however, between the five main segments. At the top of the market, five-star hotels raised ARRs by 3.8% but earned 2.6% less in RevPAR as occupancy fell by four points to 67%. Four-star hotels, meanwhile, lowered ARRs by 12.5% and saw RevPAR drop by 11.7%, though their occupancy rates rose by half a percentage point to reach 76.5%. Three-star hotels increased ARRs by 9.1% but were down 1.8% on RevPAR and eight percentage points in occupancy rates, at 66%. One- and two-star hotels, for their part, lowered ARRs by 17.2%, earning 15.3% less in RevPAR but remaining constant in occupancy at 72%. The upshot is a narrowing in the ratio of earnings to available room keys as growth in supply outpaced that of demand.
Business Tourism
Doha has a strong foothold in the global market for MICE, hosting a broad range of international gatherings each year. According to Ahmed Al Obaidli, director of exhibitions at QTA, Qatar hosts more than 150 business events each year. In 2014 rankings by the International Congress and Convention Association, Doha placed joint 108th of cities globally, having hosted 22 “significant international meetings” that year, more than Luxembourg and the same number as Abu Dhabi, Frankfurt and The Hague.
Among the main offerings in the MICE segment is the Qatar National Convention Centre (QNCC), a 40,000-sq-metre facility in Qatar Foundation’s Education City. With its distinctive tree-trunk façade (inspired by the peninsula’s native Sidra species), the QNCC has 52 meeting rooms, three auditoria and a 2300-seat theatre. Since it opened in December 2011, the centre has hosted more than 197,000 people at 347 events, notably including the 20th World Petroleum Congress (2011), the World Innovation Summit for Education (2013), the International Petroleum Technology Conference (2015) and the 13th United Nations Congress on Crime Prevention and Criminal Justice (2015).
Another big venue, the QR2.3bn ($631m) Doha Exhibition and Convention Centre (DECC) near West Bay, was finished in September 2015 by developer Qatari Diar Real Estate. It has already hosted the Doha International Maritime Defence Exhibition And Conference (March 2016), Cityscape Qatar (April 2016) and Project Qatar (May 2016). With 32,000 sq metres of space in a complex nearly three times that size, the DECC’s five column-free halls have ceilings 18 metres high and can accommodate 3500 visitors. Officials say they expect to host some 60 events by end-2016. Another key outfit is the Sheraton Grand Doha Resort & Convention Hotel, located shoreside in West Bay.
Cultural
A wide and growing diversity of cultural offerings draw tourists to Qatar each year. Among the most renowned is the Museum of Islamic Art, which Qatar Museums (QM) opened in 2008 on a purpose-built island off the south cusp of the corniche in central Doha – over 200,000 visitors a year come to see its rich collection of ceramics, glass, calligraphy, textiles, jewellery and historical artefacts. The Arab Museum of Modern Art, opened in 2010 as a joint venture between QM and Qatar Foundation, contains one of the world’s largest repositories of Arab painting and sculpture, with over 9000 works displayed in 5500 sq metres of space. Two forthcoming museums are the 3-2-1 Qatar Olympic and Sports Museum, celebrating the history of sport, and the National Museum of Qatar, designed after the “desert rose” crystallised sand formation and dedicated to the country’s heritage, from its early history in pearling and fishing to Bedouin life and the modern oil and gas industry. It is expected to open in late 2016.
Other activities that draw tourists include traditional handicrafts, music and dancing shows, live falconing demonstrations and camel races conducted on a track just west of Doha. A new family offering in the works, Doha Zoo, is scheduled to open in 2017 on 75 ha near Villagio Mall. This moved forward in April 2015 with the award of a 14-month, QR45m ($12.3m) contract to demolish existing buildings on the site, following previous tenders for a master plan (2012), architecture and engineering design (2013) and construction of temporary animal housing (2014).
Historical
The state has also sought to preserve and showcase its history, conducting restorations at Al Zubarah, a 1930s fortress and UNESCO World Heritage site in the north-west that also houses archaeological artefacts; Souq Waqif, a centuries-old marketplace in central Doha; and Katara, a 1m-sq-metre “cultural village” opened in 2011 with an amphitheatre, opera house and souq.
Katara, a centre for art, music and literature that hosts festivals, exhibitions and cultural events, has several projects moving forward. The Falcon Museum and Health Club are expected to be inaugurated by the end of 2016, with Katara Plaza and the Seafood Restaurant to follow in 2017. The Katara Plaza, being built on over 38,000 sq metres, will launch an expansion in the first quarter of 2019, the third phase of the Katara Hills project in the third quarter of 2021 and the fourth phase of the Katara Gate project in the second quarter of 2021.
Meanwhile, October 2015 saw the opening of Msheireb Museums, which occupy four carefully restored historical buildings at Msheireb Downtown Doha, a sustainable downtown regeneration project from Msheireb Properties. The museums will host local and international exhibitions, as well as public education and outreach programmes.
Other projects align with the national strategy’s aim to develop points of interest outside Doha. In November 2015 tenders closed for design consultants on plans by QTA and QM to revitalise Jumail, an abandoned fishing village in the north, and turn it into a “living history museum” with live interpreters re-enacting earlier trades. Just 1 km away, at Ruwayda, QM-backed archaeologists are unearthing ruins that include two mosques, a palace, several courtyard houses and a large fort built in the 16th century by the Portuguese. In time, says Andrew Petersen, an archaeology professor who heads the excavation team, the site could become a fully fledged tourist site akin to the visitor centre at Bahrain’s 400-year-old “tree of life”.
The historic fishing and pearling village Al Wakrah saw the soft opening in December 2014 of a new souq – part of long-term redevelopment plans stretching back several years – and several shops and restaurants opened there during 2015. QM is also planning to develop four new spaces through the restoration of historical buildings, including Art Mill, a large exhibition space on a former site of Qatar Flour Mills.
Sports
Over the past decade, Qatar has built up a vibrant sports segment that continues to expand with the approach of the 2022 FIFA World Cup. As of May 2016 locations for eight new stadiums had been announced, with work under way on six of these. The capacity of each stadium starts at 40,000 seats; the largest, Lusail Stadium, which will host the opening and final matches, will accommodate some 80,000 spectators. All eight are due to be completed by 2020 (see Construction chapter).
Qatar has ample experience hosting such events. Among the major contests it has held over the years are the multi-sport Asian Games in 2006, the Asian Football Confederation Asian Cup for football in 2011 and the Handball World Championships in 2015. A range of competitions are on the calendar as well, notably the 2016 Union Cycliste Internationale Road Cycling World Championships, the 2018 Fédération Internationale de Gymnastique Artistic World Gymnastics Championship and the 2019 World Athletics Championships. Many of these activities are held in the country’s Aspire Zone, a 2.5-sq-km sports complex of which the centrepiece is the Aspire Dome, the largest indoor sports facility of its kind. With 15,500 seats in 13 separate sport arenas, the dome has complete facilities for swimming, football, gymnastics, tennis and martial arts, surrounded by an aquatic centre, offices, park, the Aspire Academy training centre and a specialised hospital for sports medicine.
Marketing
As part of efforts to draw potential tourists from abroad, in November 2015 QTA unveiled a new “Qatar Destination Brand”, at the World Travel Market, a tourism expo held in London. The image, a “word mark” that blends Arabic, English and symbolic elements, will be used across the industry to promote the country as a tourism destination. According to QTA’s chief marketing and promotion officer, Rashed Al Qurese, the design – two years in the making and specially commissioned by QTA – was developed through a “nationwide process involving locals, youth, residents, artists and a spectrum of relevant stakeholders”. Its Arabic element was designed by the renowned Qatari calligrapher Ali Hassan.
Outlook
Given the quality of its infrastructure, solid leisure and sports segments, and state support, Qatar’s tourism sector is well placed to boost its share of a growing and competitive global market. Buoyant forecasts for capital investment in 2015-25, at 7.7% a year by WTTC data, are pegged to a firm prospect in the hosting of the World Cup, whose prestige and visibility is a key impetus in executing the project pipeline. Crucially, data projects under way at QTA, such as visitor surveys, will soon shed more light on industry trends, allowing officials to better tailor offerings to demand (see analysis). In the medium term, while headline growth figures may slow, the foundations laid in recent years mean Qatar’s tourism sector has a solid platform from which to expand into new niches.
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