GCC Hospitality & Leisure-Recreation Market: Showing Signs of Growth

The GCC hospitality and leisure-recreation market is poised for growth, led notably by the UAE and Saudi Arabia. The GCC hospitality and leisure-recreation market has a value of approximately USD178.8 billion. This market consists of two sectors. The first sector is hospitality. It consists of projects related to hotels, hotel apartments and resorts. The combined estimated value of GCC projects in this sector is USD126.8 billion. The second sector is leisure and recreation. It consists of projects related to cinemas, theaters and auditoriums, golf courses, race courses, parks, stadiums, theme and water parks, animal reserves and zoos, sports clubs and facilities, museums and galleries. The combined estimated value of leisure and recreation projects is USD52.0 billion.

Market analysis

The GCC hospitality and leisure-recreation market is showing signs of growth. According to the BNC Project Intelligence Database, there are approximately 1,692 hospitality and leisure-recreation projects in the GCC. The UAE has the largest number and value of hospitality and leisure-recreation projects in the GCC. This supports a thriving tourism industry in the UAE. Other countries in the region are also looking to advance their tourism industry by investing in hospitality and leisure-recreation projects in the coming years. Many hospitality and leisure-recreation projects are in the initial stages of construction. This indicates strong pipeline of upcoming projects. According to the BNC, approximately 968 hospitality and leisure-recreation projects are ongoing (this excludes projects on hold). The ongoing projects have a combined estimated value of USD104.4 billion. Of the ongoing projects, 15 are each worth USD1 billion or more. The combined estimated value of the 15 projects is USD23.5 billion, and makes up around 23 percent of all hospitality and leisure-recreation projects in the GCC. All 15 projects are from either the UAE or Saudi Arabia. The majority of ongoing hospitality and leisure-recreation projects are under construction. But there is a healthy pipeline of new projects in either the concept stage or design stage to replace those that are closing out in the coming years. According to this report, there are 426 hospitality and leisure-recreation projects in the initial stages of construction (i.e. concept or design). The combined estimated value of projects in the initial stages of construction is USD55.1 billion, and makes up around 31 percent of all hospitality and leisure-recreation project values in the GCC. Some notable projects that are in the early stages of development include Firdous Sobha in the UAE (USD6.8 billion), Dubai Effeil Tower Falcon City Wonders in the UAE (USD1.5 billion) and Craft & Heritage Village in Saudi Arabia (USD 1 billion). Several growth drivers support construction projects in the hospitality and leisure-recreation market. The main drivers for the hospitality and leisure-recreation market are tourism, population and global events. Many state-led initiatives are sponsoring construction projects in this market to diversify economic activities. These initiatives aim at promoting high potential sectors such as tourism.

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“The main drivers for the hospitality and leisure-recreation market are tourism, population and global events”

Tourism growth

GCC countries are putting in place the infrastructure to promote either luxury or religious tourism. This comes as part of a long-term plan for economic diversity. Some countries, such as the UAE, have done much by way of nation branding to attract foreigners. The UAE reports that tourism will contribute to 8.5 percent of its GDP by the end of 2016. Theme-based attractions offering the next unique experience brings visitors. Other countries are still in the nascent phases of developing their tourism sector. Saudi Arabia, for example, attracted 18 million visitors in 2014. But this only made up around 2.5 percent of the country’s GDP. Saudi Arabia is working on increasing the contribution of tourism to GDP. This will be partly achieved by investing in tourism-related projects as part of a long-term plan toward economic diversity. The commitment of these countries to invest in the hospitality and leisure-recreation market to advance tourism will lead to a rise in construction activity. GCC governments are on a path toward economic diversity. Part of the aim is for tourism to become a major contributor to these economies.

“… Qatar is also building stadiums and sports facilities in advance of the World Cup”

Hosting global events

International events is a great source for attracting tourist and professionals. The Dubai Expo 2020, for example, is expected to bring 25 million visitors, 70 percent of whom will come from abroad. Dubai will increase the number of available hotel and hotel apartment rooms from 94,000 on hand at the start of 2015 to approximately 164,000 at the time of the event. Similarly, Qatar will attract a significant number of football fans for the 2022 FIFA World Cup. An estimated 60,000 hotel rooms will accommodate the foreign spectators. To put this into perspective, Brazil had welcomed 1.35 million visitors from 203 countries when hosting the 2014 FIFA World Cup. This was 70 percent more visitors than what the country had estimated. As noted earlier, Qatar is also building stadiums and sports facilities in advance of the World Cup. Thus hosting a global event supports a healthy hospitality and leisure-recreation market in both the UAE and Qatar.

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