Luxury tourism in the GCC is set to grow faster than the rest of the world, with the UAE firmly in the lead, reveals a recent report. However, one GCC country will race far ahead of its peers in terms of growth in the luxury tourism sector – and it’s not the UAE.
The study, titled GCC Luxury Tourism, prepared by real estate services and advisory firm Colliers International, is part of the Arabian Travel Market (ATM) series, to be released ahead of the upcoming ATM 2018, set to be held in April.
While the global luxury market is set to grow at a CAGR of 6.4% by 2022, according to research by Allied Market Research, the Colliers report reveals that luxury hotel supply in the GCC region is expected to grow at a CAGR of 11% from 2018 to 2022.
Moreover, one country in particular is set to see stunning growth, far outstripping other member states.
One thing is crystal clear: the UAE dominates the regional landscape, boasting nearly three-quarters of the total luxury supply (a whopping 73%) in the countries studied for the report (UAE, Saudi Arabia, Kuwait, Bahrain and Oman). Not only that, the Emirates will also be home to more than half (61%) of the upcoming supply, with Dubai firmly on top.
But these facts may not be as surprising – what is, however, is that it’s not the UAE that will witness the fastest rise in luxury hotel supply. That honour goes to the Kingdom of Saudi Arabia, which will see its sector booming at a CAGR of 18% from 2018 to 2022.
The Colliers study notes that luxury hotels in the Kingdom are set to benefit from strong performance, given that such properties are less than 15% of the total supply in each city, compared to an average of 26% of total supply in the analysed markets.
Further, it notes that luxury hotels in the Riyadh, Jeddah and Al Khobar markets have been more resilient than others within the Kingdom in 2017, with Riyadh seeing a 9% growth in RevPAR (revenue per available room) and boasting an ADR (average daily rate) 132% higher than the rest of the market.
The report notes that luxury tourism around the world is set to see a boost thanks to several factors, including improved standards of living, increased spending power amidst the middle class, growing preferences for leisure vacations and the emergence of exciting new destinations.
However, while current estimates put the region ahead of the rest of the world, growth has slowed in recent years, given that the forecast rate from 2018 to 2022 is actually 4% lower than the CAGR from 1999 to 2017 – which was 15%, as opposed to the current estimate of 11%.
The report goes on to reveal that the GCC’s luxury tourism landscape was revolutionised with the opening of the Burj Al Arab in 1999, which led to a sea change in the face and skyline of the sector. In fact, the number of luxury properties in the region has tripled in the past ten years alone.
While 3,177 hotels were added between the five studied GCC member states in 1999, this number shot up to 14,955 in 2009 and stood at 37,491 in 2017. By 2022, data from STR Global and Colliers International forecasts that the number of new hotels will nearly reach the 70,000 mark.
This article was contributed by: Karthik Subramanian