Friday, November 27, 2020

Qatar hotels struggling to survive until 2022 World Cup

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Qatar has marketed its opulent high-rise hotels as jewels in its 2022 World Cup crown, but coronavirus restrictions and a glut of new properties are putting the industry at risk.

In addition to keeping foreign visitors away, travel restrictions have complicated staffing preparations just as Qatar’s hotel sector was expanding for the star soccer event.

A former hotelier from Qatar told AFP that preparations had become “difficult” and that staffing was not at the levels necessary to ensure properties are ready on time.

“It’s a fight,” he said.

A Doha hotel manager said the lockdown had forced him to wait three to five months to bring in staff from abroad, complicating training plans.

As in much of the Gulf, migrant labor is vital to the gas-rich emirate, where expatriate workers outnumber 333,000 Qataris nearly nine to one.

Without a large middle class to sustain domestic tourism, Qatar hoped to expand its hotel sector by 2022 by encouraging mini-breaks for passengers connecting via Doha on Qatar Airways.

Currently, that promotion is frozen.

Qatar expects up to 1.5 million people to descend on the tiny Gulf nation for the World Cup, and in the months before and after the big event.

But the growing supply of hotel rooms needed for the tournament could hurt operators in the two years leading up to the tournament.

The hotel market is “generally oversupplied,” said Pawel Banach of property valuation experts ValuStrat, warning that not all hotels in Qatar will survive the coronavirus recession.

Smaller properties have suffered the most during Qatar’s strict shutdown, the Doha manager said, and non-residents have largely been unable to visit the country since March.

“Some hotels lost between 30 and 50 percent of their expatriate staff,” he added. “Surely the country has been affected.”

Even Doha’s best-known properties are rarely full, with many relying on its restaurants and bars to stay afloat as demand for stays has plummeted.

– “Difficult market” –
The situation shows no signs of improving anytime soon.

The strict restrictions on entry have been extended through January, meaning hotels are unlikely to exceed the 50 percent occupancy rates for 2020 predicted by real estate services firm Cushman and Wakefield.

That’s more than 10 percentage points in 2019, squeezing the bottom line on many properties.

Qatar is still aiming to expand its hotel room capacity from 28,000 to around 45,000 by 2022, according to Banach, making it difficult for existing hotels to remain profitable as new properties open.

“Surely it could be a huge oversupply that will be difficult to sustain,” he said. “It is a difficult market, obviously.”

Amid the challenges, some developers have abandoned high-end hotel plans, opening instead as hotel-style serviced apartments popular with expat professionals.

Qatar’s hotel industry has been taking a hit since 2016 when the price of oil plummeted, depressing business in the Gulf.

This was followed by the 2017 Gulf crisis, in which Saudi Arabia, the United Arab Emirates and other countries abruptly cut ties with Doha.

The cut has caused the trips of its two neighbors, once key sources of income for Qatar, to dry up overnight.

In what has become a stalemate, neighboring states accuse Qatar of being too close to Iran and radical Islamists, Doha denounced.

– Excess of five stars? –
Qatar had pledged to have up to 84,000 hotel rooms before the lockdown.

Cruise ship accommodations, hotel apartments, and private home stays will make up for the slack, probably playing a bigger role than in any World Cup before.

Authorities say 16 floating hotels will also be built, providing around 1,600 rooms in total.

The head of Qatar’s organizing committee had promised an “affordable” tournament to deal with the post-pandemic economic depression.

But today, only 10 percent of Qatar’s hotels are three-star, and 56 percent are five-star.

Banach, the property expert, warned that there could be a shortage of more modest and cheaper options in 2022.

As for the number of visitors to the World Cup, “it is impossible to predict” before the pandemic ends, said the Doha hotelier.

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