Qatar’s Hotel & Tourism Market Overview Qatar Hospitality Summit

Chris Hewett – Associate Director TRI Consulting

AGENDA Introducing TRI Consulting Doha Hotel Market Overview HotStats Performance Data Market Outlook

Key Facts of TRI Consulting

20 years

1,000+

110

Advising clients in the GCC, Middle East & Globally

Assignments conducted across the region

Hotel Management Agreements signed since 2010

75

100

50

Years of combined experience in TRI’s team of advisors

Major negotiation points reviewed in our operator selection process

Countries visited in the Middle East, Europe, Asia and Africa

Qatar Tourism Overview – Key Facts

2.93

3.7%%

11.5 %

million international visitors in 2015

growth over 2014

Average annual growth (2010 – 2015)

44%

QAR 13.6

20,713

Of visitors came from the GCC region

billion of direct contribution to GDP

Hotel rooms and apartments in 2015

Source: QTA

Qatar Tourism Overview – Key Facts ADR Performance 900

800

785

2013

2014

2015

735 763

700 580 557

600 500

395 390

400

342

300

520

318 279 292

2014

2015

QAR 557 73.0%

QAR 520 71.0%

200 100 0

5 Star

4 Star

3 Star

Overall

Supply Overview

98

21

119

Hotels

Hotel Apartments

Hotels & Apartments

20 New Properties in 2015

18,795

1,918

20,713

Hotel Keys

Apartment Keys

Total Keys

Source: QTA

Hotel Profitability Benchmarking Hotel profit and loss benchmarking tool allowing direct comparison with your competition Started in the UK in 1997 and now covers 1,650 hotels with 360,000 rooms across Europe and the Middle East Started operating in the MENA region in 2011 Consists of over 450 hotels across the MENA region Allows for the comparison of over 85 line items within the hotel profit and loss statement

Regional Performance Performance Comparison – 2015 Occ. %

ARR (US$)

RevPAR (US$)

TRevPAR (US$)

Payroll %

GOPPAR (US$)

Doha

70.2

209.5

146.9

344.4

24.3

204.5

Abu Dhabi

74.3

166.2

123.5

249.6

30.9

139.6

Dubai

79.9

278.4

222.3

376.6

23.4

244.7

Cairo

53.7

110.2

59.1

110.7

20.9

74.7

Sharm El Sheikh

59.6

52.9

31.5

55.6

25.3

33.6

Jeddah

77.2

272.5

210.3

331.9

22.3

234.4

Riyadh

62.8

230.5

144.8

241.9

23.7

169.7

Kuwait

49.9

238.4

123.9

280.7

26.4

166.1

Key Performance Indicators

Metric

2014

2015

VARIANCE

Rooms Occupancy (%)

70.7

70.2

-0.5%

Average Room Rate (QAR)

799.8

767.0

-4.1%

Rooms RevPAR (QAR)

565.2

535.8

-5.2%

F&B RevPAR (QAR)

612.9

609.2

-0.6%

1,280.8

1,262.5

-1.4%

Payroll Percentage of Total Revenue (%)

22.2

24.3

2.1%

GOPPAR (QAR)

770.7

712.0

-7.6%

GOP Percentage of Total Revenue (%)

42.6

39.7

-2.9%

TRevPAR (QAR)

Market Segmentation and Average Rates Market Segmentation - 2015 50.0

% of Demand

% of Change 40.0

44.1

31.4

30.0

40.0

Corporate demand continues to drive room nights in Doha with 44.1 percent, followed by B.A.R at 22.7 percent.

20.0 30.0

22.7

6.0

0.9

20.0

-0.5

-5.0

10.0

B.A.R.

Corporate

Leisure

Other

(QAR)

% Change

2.9

1,000.0

800.0

-20.0

-2.7

5.0 0.0

-6.8

-5.0

700.0

-10.0

600.0

400.0

-15.0

-18.6

-20.0 845.6

765.2

895.5

B.A.R.

Corporate

Leisure

Conference demand increased 31.4 percent to 9.2 percent of overall demand.

-0.5

-2.3

500.0

Leisure demand generated 7.9 percent in 2015, a reduction of 26.2 percent on 2014.

-30.0

Conference Tours & Groups

Average Rate by Segment - 2015 900.0

0.0 -10.0

1.9

-26.2

0.0

14.2

9.2

7.9

10.0

629.4

794.9

678.6

300.0

-25.0 Conference Tours & Groups

Other

The leisure segment generated the highest average rate at QAR 895.5 closely followed by B.A.R. at QAR 845.6.

Market Segmentation and Average Rates Revenue Mix Lei sure, 3.2%

Food and Beverage generates on average 46.0 percent of total revenues, followed by rooms with 42.7 percent

MOD, 5.7%

C&B Room Hi re, 2.4% Bevera ge, 17.0%

Rooms, 42.7%

Rooms department profits decreased to 79.5 percent Food and Beverage profits decreased marginally to 42.4 percent

Food, 29.0%

Department Profits 90.0% 80.0%

79.5%

70.0%

59.5%

60.0%

51.4%

50.0%

52.6%

42.4%

40.0% 30.0% 20.0% 10.0% 0.0%

Rooms

Food & Beverage

Leisure

MOD & Others Departmental Profits

Food and Beverage Performance F&B Revenue (QAR) 2014

2015

Food Revenue PAR

383.0

366.0

Beverage Revenue PAR

203.0

214.0

Bar Food

990,900

906,490

Bar Beverage

2,936,000

3,295,660

Total Bar Revenue

3,926,900

4,202,150

Res Food

5,284,800

4,991,200

Restaurant Beverage

2,943,340

2,984,444

Total Restaurant Revenue

8,228,140

7,975,644

Key F&B Expenses (%) 2014

2015

Food Costs

29.0

28.7

Beverage Costs

20.9

21.1

Direct Expenses

10.8

11.7

Payroll Expenses

19.0

20.6

Department Profit

44.6

42.4

Food and Beverage PAR has decreased to QAR 580.0 A bar revenue increased to an average of QAR 4.2 million however restaurant revenues reduced to QAR 7.9 million. Food and Beverage costs remained stable, however payroll increased to 20.6% Food and Beverage profits reduced to 42.4 percent due to lower revenues and higher operating expenses.

KEY Key Operating Expenses OPERATING EXPENSES Key Operating Expenses (%)

2014

2015

Payroll Expenses

22.2

24.3

Admin & General

2.3

2.4

POMEC

2.5

2.5

Sales & Marketing

4.8

5.0

Energy Costs

2.7

2.9

Gross Operating Profit

42.6

39.7

All key operating expenses saw a marginal increase in 2015 Payroll remains the key operating expense at 24.3 percent of total revenue Energy costs have increased marginally to 2.9 percent of total revenue Gross Operating Profits have decreased to 39.7 percent due to lower overall revenues from rooms and food and beverage

Looking Ahead… Qatar Hotel Room Supply

Existing

Future

18,975 Existing hotel rooms

27,500 25,000

12,200

22,500

Hotel rooms under construction

20,000

17,500 15,000

48

12,500

New hotels expected

10,000 7,500

254

5,000

Average keys per property

2,500

5 Star

4 Star

3 Star

2 Star

1 Star

Overall

KEY Market Outlook OPERATING EXPENSES The continued challenges from lower oil prices, stronger dollar and weaker regional and global economies will impact hotel performance in Doha in 2016 and early 2017 Weaker corporate activity in the region coupled with Doha’s high reliance on this segment will see a more competitive environment in 2016. As demand softens, challenges will arise as properties try to defend market share. The strong supply pipeline, especially with the midmarket hotels will see the market witness greater diversification away from the high proportion of four and five star properties. The reduced spending power of corporate and leisure visitors will further drive a softening of rates. The heavy government investment in infrastructure and large scale projects which are part of the economic diversification plan is expected to demand growth strengthen from 2017 / 2018 onwards.

THANK YOU