Qatar's Battered Tourism Sector Will Need Three Years to Recover

(Bloomberg) -- Qatar’s tourism industry will need three years to recover from the loss of tourists from Saudi Arabia and other Gulf states after the gas-rich country was boycotted by its neighbors in June 2017.

The host of the 2022 World Cup plans to add a further 17,000 hotel rooms to the 26,000 it already has to prepare for the soccer tournament, a target that’s putting pressure on room rates as visitor numbers decline, Hassan Abdulrahman Al-Ibrahim, the acting chairman of the Qatar Tourism Authority, said in an interview with Bloomberg TV in Doha.

“Our previous strategy focused on regional markets,” Al-Ibrahim said. “We will need two-to-three years to recover from the drop that we had in visitors.”

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and trade ties with Qatar last year to punish it for allegedly financing Islamic militants and having relations with Iran -- accusations that Qatar has denied. About one million people visited the country in the first half of 2018, a third fewer than a year earlier, according Qatar Tourism Authority data. Most of that decline came from visitors from neighboring countries.

Qatar's Battered Tourism Sector Will Need Three Years to Recover

Since the embargo, Qatar has relaxed visa requirements, sought partners to attract tourists from Russia, China and India, and taken other measures to stimulate the sector, Al-Ibrahim said. These steps have diversified the countries where tourists have come from and have stimulated the industry that aims to host 5 million visitors in 2023 and 7 million in 2030, he said.

Hotel occupancy rates declined slightly to 60 percent in the first half of 2018 compared with a year earlier. Revenue per available room, an industry metric, fell 16 percent to 235 Qatari riyals ($65), according to government data. This slide, coupled with a building spree, could put pressure on existing properties. Marriott International Inc., Hilton Worldwide Holdings Inc. and InterContinental Hotels Group Plc operate 14 of the country’s 122 hotels.

“We are facing a challenge because the number of units are increasing,” Al-Ibrahim said. “We are trying to support the hotels and tap into new markets.”

©2018 Bloomberg L.P.