Kuwait’s tourism sector grows fast

Recent data show that Kuwait’s tourism sector had a good summer, with its hotels outperforming those found in many other GCC markets.

Recent data show that Kuwait’s tourism sector had a good summer, with its hotels outperforming those found in many other GCC markets. Both public and private industry stakeholders are keen to build up the market further, although the limited scope of Kuwait’s tourist offering could make meeting targets difficult to achieve, at least in the short term.

Positive performance in August

A report by TRI Consulting Middle East, released in September, found that Kuwait and the UAE were the only countries in the Middle East and North Africa in which hotels performed well during August, traditionally one of the slowest months in the region. Kuwait benefited from the Eid al Fitr holidays, which pushed up demand, particularly from domestic and Saudi Arabian visitors, the report concluded.

Hotel occupancy increased 3.4 percentage points to reach 37%, while the average room rate rose 12% to hit $271.72, resulting in a 23.3% jump in revenue per available room.

While these are positive signs, the tourism sector remains largely underdeveloped and Kuwait does not have the variety of tourist attractions of some of its neighbours.

Analysts are quick to point out that this does, of course, offer opportunities. Recognising gaps in the industry, the government released a five-year tourism development plan in 2011. By 2015, Kuwait hopes to welcome 1m tourists annually, according to Khaled Al Ghanim, deputy chairman and managing director of the state-owned Kuwait Touristic Enterprises Company (TEC). However, other forecasts are more cautious. The World Travel and Tourism Council expects international tourist arrivals to reach 331,000 in 2013, growing by 3.6% annually to hit 485,000 by 2023.

Boosting leisure tourism

Experience over the past decade suggests that growth is possible. According to Alpen Capital’s GCC Hospitality Industry Report 2012, tourism receipts – including expenses incurred on hotels, restaurants, travel and communication – increased at a compound average growth rate of 12.8% between 2002 and 2011. While Alpen attributed this expansion primarily to a rise in business tourism, as of 2011 leisure spending still accounted for about 60% of the market.

This figure places Kuwait at the low end of the spectrum for the GCC region, where the leisure market on average accounts for around 70% of tourism spending, led by the UAE at 77.4%, according to the Alpen report.

Boosting leisure tourism is an important part of the state’s plans. Earlier this year, Al Ghanim, told industry press that his organisation plans to launch a host of entertainment, sports and tourism projects valued at $460m in the coming years.

Investing in hotels

New leisure facilities would complement the roll-out of a number of planned hotels. According to Hotelier Middle East, several four- and five-star resorts are slated to open by 2015, including four projects falling under the InterContinental Hotel Group umbrella, together with the Jumeirah Messilah Beach Hotel and Spa.

Kuwait’s Partnership Technical Bureau has listed the development of resorts, recreational facilities and a marina on Failaka Island as priority projects. In 2012, the Kuwait Hotel Owners Association (KHOA) said it expected 10,000 new rooms to be available by 2015, increasing the supply by almost a third.

Other developments include the re-opening of the Radisson Blu Hotel, following a $52m renovation, and the September 2013 announcement that Millennium and Copthorne Hotels had signed a deal with Gulf Real Estate Development House to manage its new Millennium Hotel and Convention Centre in Kuwait City. When complete, the new hotel will offer 307 five-star rooms and 4000 sq metres of exhibition space.

The seven-star segment is also set for development. In September 2012, the Kuwait Municipality unveiled a proposal to develop a series of luxury hotels. Authorities plan to develop properties at the Fair Ground, Al Salam Palace and Sabah Al Salem University by teaming up with the private sector.

However, hotel operators in Kuwait believe the market needs to mature before it is ready to receive a slew of new top-end resorts. The KHOA has criticised Kuwait’s seven-star luxury plans, arguing that occupancy rates are already low.

“Any new hotel coming to the market will definitely affect the existing hotels, as we are in a small country with little demand… I think that the planned hotels, which will be launched soon, deserve to be better promoted,” Wassim Mahdi, the director of sales and marketing at the Radisson Blu Hotel, told the local media in September.

While Kuwait’s efforts to boost visitor numbers are gathering pace, increasing attractions and retail developments will likely be pivotal, if meeting targets is to be balanced with supporting industry players.

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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