Market Research

Adopting Green Building Practices Beneficial to Hospitality industry of GCC Countries in this time of Recession & Economic Uncertainty


Over the past two years, a combination of factors ranging from a highly volatile crude market, to a tense geopolitical situation, has led to a general slowdown in the economy in the GCC countries. This slowdown has had its repercussions on many industries, among them, hospitality. According to Smith Travel Research - a leading market research agency in the industry, “the market penetration index has gone south from +11.1 percent in 2014 to -7.8 percent in the year ended 2015 and the revenue growth index, a key benchmark to assess the health of the business, has moved from +6.3 percent in 2014 to -8 percent in 2015.

Against this scenario of a substantially reduced demand and over-supply, is the projected addition of about 18,000 hotel rooms in Riyadh & Jeddah alone – over 50 percent of them 5 star developments, as a part of the expansion plans for major international hotel chains. One might wonder how this bodes for the industry in the times ahead. The industry is optimistic for 2016 and the years ahead, basing their optimism on the fact that a low debt, coupled with substantial foreign reserves, and a diverse investment scenario is going to help the economy bounce back, stronger than before.  

An encouraging cue comes from the American hospitality industry. Since hitting rock-bottom in the recession economy in 2009, the hospitality industry in the USA showed a remarkable growth & turn-around in the last 6 years, with a positive growth in fundamentals during this time. In June 2015, at the annual hospitality conference, the president and COO of STR announced the hotel industry’s return from recession, with the US hotels hitting all-time-highs in “occupancy, average daily room-rates, and the money made off each room.”

Something that the hospitality industry in the Middle East could actively consider for the new developments being planned is to implement measures to build green and save on costs and increase their profitability margins. “Currently, there are more than 400 LEED-certified hotels globally, comprising nearly 133.9 million square feet. And the number of LEED hotels is expected to increase significantly over the coming years: there are currently over 1,600 registered hotels totaling 986.6 million square feet in the pipeline; nearly four times the total number of LEED certified hotels.” (USGBC Report – LEED in Motion: Hospitality, February 2016)

The Late Sheikh Zayed Bin Sultan Al Nahyan, founder of the United Arab Emirates, said, “On land and in sea, our forefathers lived and survived in this environment. They were able to do so because they recognized the need to conserve it, to take from it only what they needed to live, and to preserve it for succeeding generations.”Kamal Zayati, general manager at Al Raha Beach Hotel, believes that 2016 seems to be a challenging year, but the hotel has no plans to downsize yet. They will, instead, focus on controlling expenditure, mainly on utilities, which is a part of their drive for environment protection and reducing the hotel’s carbon footprint.

Hotels consume non-renewable and natural resources at an exponential rate. And given the hopes for a revival in the tourism industry in the Middle East, this is only expected to increase further. In this situation, it becomes imperative that more and more of the industry leaders in the hospitality industry respond to the pressing need to conserve the environment and plan the new developments that would not only be built responsibly, but also create built facilities that conserve resources and give back to the environment.

Architects at TrueCADD, worked alongside general contractors across the design and build of a couple of five star hotels, resorts and recreation clubs.

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