Investment has always been a fairly good predictor of future performance in the hospitality game, apart from the outliers, of course – force majeure situations skewing the otherwise plainly distributed data to one side or the other. While the coronavirus pandemic can and should certainly be considered such an outlier (unless it sets in motion a whole series of health threats destined to capture the world over the next few years - a prospect supported by some experts), it failed to deter high-volume investment activity in the Gulf Cooperation Council (GCC) region.
To date, there is $27 billion worth of hotel investments in the pipeline in the GCC, while over $3.5 billion worth of new projects in the region has been awarded since the start of 2020 alone, according to the Hotel Investment Forecast released by the Arabian & African Hospitality Investment Conference (AHIC). Ed James, director of content and analysis at Meed Projects, shares that this primarily signals the positive attitude owners and cash holders have towards the mid-term outlook of the industry. Essentially, they are optimistic about hospitality getting back to business in the next two to three years, when the majority of new properties are scheduled to open their doors to guests.
When it comes to long-term perspectives, the players are even more bullish, injecting a total of $27 billion, the biggest part of which is channeled towards ‘gigaproject’ tourism investments in Saudi Arabia led by the Red Sea Project, Neom, Amaala, Diriyah Gate, Al-Ula, and others. Overall, over 40,000 rooms are estimated to enter Saudi Arabia’s market in the nearest future, as the Kingdom is pursuing its highly ambitious strategy to position itself as an attractive destination for luxury and high-end tourism.
Another massive project to pay attention to is the Yenkit Hills development in Oman, featuring two five-star hotels and other tourism and residential units. Altogether, an estimated 75,900 rooms are forecast to be added across the region in the period 2021-24, based on the current pipeline of hotel and serviced apartments project completions in GCC.
In conclusion, it seems like owners, developers, and investors do not lose heart when it comes to the hospitality properties in the Gulf region. The “Great Reset” – a term used in the area to describe the industry’s reemergence from the pandemic - indeed seems more optimistic than the “New Normal”, which somehow proposes a grimmer connotation. With the vaccine rates climbing up and people getting back to workplaces, a more positive approach might as well become a well-supported position.