Looming rate war threatens Doha hotel industry

Experts warn hotels not to slash rates as record supply comes online

Competition is expected to soar in Doha's West Bay area
Competition is expected to soar in Doha's West Bay area

Qatar hotel average daily rates (ADR) are projected to slump as hoteliers struggle to maintain occupancy levels amid a record 20% increase in supply in 2012.

There were 77 hotels with around 10,000 rooms available in Qatar in August 2011, according to research by TRI Hospitality Consulting unveiled at the Hotelier Middle East Qatar GM Debate, which took place at the Grand Hyatt Doha yesterday.

Just over 2100 rooms are expected to enter the Qatar market before the year-end.

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“ADR will be the first casualty as more hotels come online,” TRI Hospitality consultant Christopher Hewlett said.

However, experts at the event warned that slashing rates would “hurt” the country’s hotel industry.

“We need to believe in premium-level rates in Qatar, there is no reason rates should be too far behind Dubai. We have to be somewhat bold as we look ahead and it’s a nervous time. But we have to hold on,” commented Simon Casson, regional VP and GM, Four Seasons Hotel Doha.

“Over the past five to seven years Qatar has done a good job of bringing rates from up from US $150 dollars to $300 dollars a night, it’s important not to take too many short-term decisions that will hurt the market,” he added.

The Hilton Doha, scheduled to open “in a few days” is among the newcomers to Qatar in 2012. General manager Andreas Searty said: “Doha has grown occupancies steadily up to 60-65% the growth in development is supporting all our hotels and this means more hotels coming up is supporting the economy.

“So we need to focus on what we do well [rather than dropping rates]. By doing that we can attract new segments and business. We could focus on length of stay in Doha to improve occupancy. Currently guests stay for one or two days only, by attracting [business people and their] spouses, more business generated by conventions, the stay increases,” said Searty.

W Hotel Doha & Residences general manager and area manager – Qatar Safak Guvenc said dropping rates should be a last resort for hotels.

“If we start dropping our rates and it becomes a rate war the only one that wins is the consumer,” he explained.

“Doha still has room to grow on the rates, but Qatar Airways and QTA are doing the right things to increase demand.

"Dropping the rate is the last thing you should focus on, instead you should focus on personalised service," added Guvenc.

In Febrary, Average RevPAR at Doha hotels was US $163.35 compared to $266.16 at Dubai hotels, according to TRI Hospitality Consulting data.


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