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2017 Annual TourismPerformance Report

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Introduction

1A visitor is a traveler taking a trip to a main destination outside of his/her usual environment, for less than a year, for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident entity in the country or place visited. A visitor (domestic, inbound or outbound) is classified as a tourist (or overnight visitor), if his/her trip includes an overnight stay, or as a same-day visitor (or excursionist) otherwise. Source: United Nations World Tourism Organization.

Qatar welcomed 2.26 million visitors1 in 2017, compared to 2.94 million visitors in 2016, representing an overall decline of 23%. In the first five months of 2017, Qatar witnessed a 7% increase in visitor arrivals. However, annual visitor arrivals were negatively affected by political developments in the region and the Saudi-led blockade that was imposed on Qatar beginning in June. This, and the related border closures and travel bans, resulted in large declines in visitors who are nationals and residents of the GCC blockading countries.

While the blockade has affected overall visitor arrivals negatively, key policy changes implemented in 2017 have spurred remarkable growth across certain source markets and visitor profiles. In early spring, Qatar introduced an e-visa platform which allows travelers of all nationalities to apply for tourist visas online. This was followed, during the summer, with the introduction of a visa waiver for citizens of more than 80 countries, granting eligible nationals visa-free entry to Qatar for either 30 or 90 days (depending on their nationality). Later in the year, Qatar introduced the Electronic Travel Authorization (ETA) system, which allows visitors of all nationalities who have a visa to or residence permit in certain countries, including Schengen countries, Australia, the UK, the US, and Canada and New Zealand, to obtain an ETA 48 hours before visiting Qatar, which in turn allows them to obtain a visa-on-arrival. These efforts to diversify source markets, set

against a strong global economic backdrop, continue to show promising results, with increases in visitor arrivals from key primary markets, including China, Russia, South Africa, Australia and Brazil.

Other positive developments include the free transit visa and accompanying +Qatar campaign, which ran from May to December 2017, and continued to attract more stopover visitors; 2017 saw an increase of 26% in stopover visitors compared to 2016. As part of the stopover segment, the cruise industry continues to grow at a rapid pace, with Qatar welcoming 20 ships at Doha Port throughout 2017, carrying 46,500 passengers: an increase of 265% in cruise passengers compared to 2016.

Meanwhile in the tourist accommodation sector, it is notable that hotel demand grew throughout the year, even after the blockade, despite overall key performance indicators across the sector in Qatar showing declines. This is partly due to the fact that visitors, on average, stayed for longer periods during their trips, and also indicates a change in visitor profile, where fewer visitors stayed in non-hotel accommodation.

Beyond performance indicators, the events of 2017 have acted as a catalyst, fast-tracking strategic developments that will spur long-term growth in the years to come. In September 2017, QTA launched the Qatar National Tourism Sector Strategy: The Next Chapter, a five-year plan which will see QTA

transformed into the National Tourism Council (NTC), and the introduction of three new entities that will build the capabilities of the business events sector, develop tourism products, and expand the presence of the Qatar destination brand internationally. The Next Chapter charts pathways for the public and private sectors to leverage key sporting events to attract sports tourists, introduce new festivals and events, capitalize on Qatar’s natural assets to create unique coastal, marine and desert experiences; and celebrate Qatar’s culture with the world through the development of a new Cultural District.

With the beginning of 2018, QTA’s focus is to activate the newly-opened representative offices in China, and to ensure industry members are equipped to tap into the largest outbound tourism market in the world. We will also enter the Russian and Indian markets, with a representative office due to open in the former in Q1. Ten more visits by mega-cruise ships are also due to take place in the first quarter of 2018, in addition to several mass-participation sports events.

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ArrivalsArrivals by Nationality, Grouped by Region

In 2017, 2.26 million international visitors came to Qatar, 23% fewer than the 2.94 million visitors welcomed in 2016. Due to the blockade, total arrivals of GCC nationals fell by 47% in 2017 compared to 2016, and arrivals from Other Arab nationals fell by 26%. The travel ban on nationals of the blockading countries had a significant impact, as

did extended flight times and costs for non-national residents of those countries.

Visitor arrivals of nationals of the Americas and Other Asia including Oceania were marginally down by 1.2% and 1.3%, respectively. However, arrivals from European nationals and Other African nationals grew by 6.3% and 43% respectively, the

former largely indicative of significant growth in cruise tourism. Although growth from Other Africa was notable in relative terms, visitor volumes from this region represent a lower share of total arrivals compared to any other region.

Arrivals to Qatar by Nationality, Grouped by Region, 2012-2017

2012 2013 2014 2015 2016 2017 % Change 2016-17

CAGR 2012-17

Cumulative growth

2012-17

Total 2,323,573 2,611,969 2,839,373 2,941,130 2,938,096 2,256,490 -23.2% -0.6% -2.9%

GCC 952,870 1,090,264 1,124,333 1,300,221 1,410,657 752,876 -46.6% -4.6% -21.0%

Other Arab 278,161 287,177 313,491 267,349 221,894 165,318 -25.5% -9.9% -40.6%

Other Africa 31,909 35,475 35,742 36,558 32,390 46,460 43.4% 7.8% 45.6%

Other Asia inc. Oceania 579,649 651,957 782,794 732,964 660,364 652,102 -1.3% 2.4% 12.5%

Europe 361,943 413,829 437,842 457,940 455,076 483,834 6.3% 6.0% 33.7%

Americas 119,041 133,267 145,171 146,098 157,715 155,900 -1.2% 5.5% 31.0%

Americas Other Africa

Europe Other Arab

Other Asia inc. Oceania GCC

2012 2013 20172014 2015 2016

3.0

0.5

0.0

1.0

1.5

2.0

2.5

No.

of a

rriv

als

Source: Ministry of Interior and Qatar Tourism Authority

Arrivals to Qatar by Nationality, Grouped by Region, 2012-2017

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Growth by Visitor Segment

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5000

35000

30000

25000

20000

15000

4000

3000

2000

1000

0

China Russia Ukraine Lebanon South Africa India

Growth in the cruise tourism sector in 2017 was significant, with approximately 46,500 visitors disembarking in Qatar from 20 different cruise ships that made port calls in Doha during the year. This is compared to 12,700 cruise passengers that visited Qatar in 2016, representing an increase of 265%, with the majority of visitors coming from European markets, the highest being nationals from Germany, U.K., and Italy.

Qatar was also made more accessible to visitors around the world thanks to a series of visa facilitation policies, introduced in late 2016 and

throughout 2017. In November 2016, Qatar introduced a free, 96-hour transit visa, available to all nationalities transiting through Doha on Qatar Airways. In 2017, over 41,000 passengers made stopover visits using this visa. In August 2017, Qatar introduced visa waivers for citizens of more than 80 countries, allowing eligible nationals visa-free entry for either 30 or 90 days in Qatar. Since inception, nearly 275,000 visitors have entered Qatar visa-free, and significant initial growth has been witnessed, particularly from those countries that previously required traditional visas to enter Qatar, such as;

India, Russia, South Africa, Ukraine, Lebanon and China, as highlighted in the chart below. Of particular note is India, where losses of Indian nationals residing in the GCC region (and typically entering on GCC resident visas) after the blockade have been recovered by Indian nationals, likely residing in India or otherwise outside the GCC region, able to enter Qatar visa-free.

These cruise tourism and visa facilitation efforts are contributing to greater visitor volumes across a more diversified mix of visitor source markets.

Growth from selected countries post visa faciliation in August 2017

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In 2017, India was the largest non-GCC visitor source market with 333,708 Indian nationals traveling to Qatar. India was followed by the UK and the United States, with Qatar welcoming over 100,000 visitors from each. The other top-ten visitor source markets include Pakistan, China and various European countries.

After a number of years of significant growth, arrivals of GCC nationals fell sharply in 2017 as a result of the blockade. Arrivals from Other Arab countries also fell, which marked a continuation of declining visitor numbers since 2014, but somewhat sharper (25% decline vs. 15% and 17% in previous years). Arrivals from all other regions grew, most

notably from Other Africa (albeit in lower volumes), from which arrivals were 46% higher than in 2012. Among Europeans, visitor arrivals grew 34% since 2012; among nationals of the Americas, 31%; and among nationals of the Other Asia, including Oceania region, 13%.

Visitor Arrivals in 2017:Top 10 non-GCC Nationalities

Arrivals growth by visitor nationality, grouped by region, 2012-17

Top 10 non-GCC nationalities in absolute size, 2017

Source: Ministry of Interior, Qatar Tourism Authority

Indexed arrivals to Qatar by nationality, grouped by region (2012=100)

Source: Ministry of Interior, Qatar Tourism Authority

IndiaU.K.U.S.APakistanChinaGermanyEgyptAustraliaFranceItaly

120,495101,144

49,51045,62744,44043,61442,76542,02637,436

100,000 200,000 300,000 400,000

333,708

No. of arrivals

170

150

130

110

90

70

50

GCC

Other Arab

Other Africa

Other Asia inc. Oceania

Europe

Americas

2012 2013 2014 2015 2016 2017

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Arrivals growth by visitor nationality, 2012-17

Although growth was not achieved across the GCC and Other Arab countries between 2012 and 2017, in large part due to the blockade imposed in 2017, significant growth in a variety of source markets across other regions was recorded. Specifically, the countries with the fastest growth rates between

2012 and 2017 include Brazil (13%) from the Americas; Italy (8%), Russia (15%) and Turkey (22%) from Europe؛ and China (26%), Australia (17%), Hong Kong (16%), Kazakhstan (11%) and Thailand (9%) from Other Asia including Oceania. In addition, nationals of Kuwait (a non-blockading GCC country),

increased by 8% over this same period. The largest growth, in terms of actual volumes, came from India with an increase of 55,559 visitors (+4%). Other countries with notable increases in volume (but not among the fastest growing) include U.S.A., Germany, and The Netherlands.

Top 10 Nationalities in Terms of Fastest Growth Rates, 2012-17 Top 10 Nationalities in Terms of Increase in Arrivals Volume, 2012-17

8%

8%

9%

11%

13%

15%

16%

17%

22%

26%30%25%20%15%10%5%0%

China

Turkey

Australia

Hong Kong

Russia

Brazil

Kazakhstan

Thailand

Italy

Kuwait

Turkey

IndiaChina

KuwaitAustralia

U.S.A

ItalyGermany

Russia

Netherlands

31,463 (+26%)

25,596 (+8%)

23,094 (+17%)

22,728 (+5%)

19,421 (+22%)

11,635 (+8%)

8,895 (+5%)

4,902 (+15%)

4,248 (+6%)

55,559 (+4%)

60,0000

Source: Ministry of Interior, Qatar Tourism Authority Source: Ministry of Interior, Qatar Tourism AuthorityNote: CAGR for 2012-17 shown in brackets in the labels

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While the blockade contributed to a decline in visitor arrivals in 2017, the tourist accommodation industry performed relatively well. Overall, hotels and hotel apartments in Qatar witnessed an increase in demand in 2017 compared to 2016, with the number of rooms sold increasing by 3.4%. The pace of growth in hotel demand slowed following the blockade, but continued to register positive growth. This is supported by a higher average length of stay (3.75 nights across all hotels and hotel apartments), as well as a changing visitor profile, with fewer visitors staying in non-hotel accommodation (e.g. those visiting friends and/or relatives). Despite the growth in hotel demand, the overall performance of the accommodation sector remained subdued. This is a result of continued growth in supply (up 10% from 2016), which continued to weigh on the key performance metrics.

AccommodationAccommodation performance in 2016/2017

Qatar Accommodation Performance Summary, 2016 vs 2017

Source: STR

Accommodation Sector Perfomance Summary 2016-2017 YTD 2016 YTD 2017 Occ ARR RevPAR ALOS Occ ARR RevPAR ALOS

All 62% 483 299 3.39 58% 437 253 3.75All Hotels 62% 488 301 3.19 57% 446 255 3.42

All Hotel Apartments 62% 436 272 9.29 65% 372 244 13.445-Star 59% 690 409 2.58 56% 631 354 2.714-Star 67% 310 207 5.01 59% 286 168 5.523-Star 57% 280 159 2.50 57% 224 129 2.98

1- & 2-Star 55% 197 108 2.36 47% 177 83 2.80Deluxe Apartment 59% 503 299 11.19 65% 413 267 15.68

Standard Apartment 68% 320 218 7.20 68% 272 184 9.98

15%10%5%0%

% C

hang

e

-5%-10%-15%-20%

3.4%

10.2%

-6.2%-9.5%

-15.1%RevPARARROccupancySupplyDemand

(Rooms Sold) (Rooms Nights)

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The majority of accommodation classification segments witnessed declines in 2017, with the exceptions of the 3-Star and Deluxe Apartment segments, in which occupancy rose by 1% and 9% respectively. The occupancy rate across all hotels and hotel apartments was 58% in 2017, down 6% compared to 2016.

Average Room Rates (ARR) were lower across all hotels and hotel apartments in 2017 compared to 2016. With the exception of the 4-Star and 5-Star segments, ARR declined in excess of 10%. These large drops in ARR are partly reflective of increased supply, and are typical industry reactions to new incoming supply and increased competition.The largest decline in ARR was witnessed in 3-Star hotels and Deluxe Apartments. As a result, these segments were able to record some growth in occupancy. Following ARR declines, RevPAR was down in all segments for 2017 compared to 2016, most notably in the 1- & 2-Star segments.

0%

-5%

-10%

-15%

-20%

-25%

Apartment Apartment

-8.5% -7.6%-10.2%

-15.1%-18.0%

-19.8%

Deluxe Standard5-Star 4-Star 3-Star 1- & 2-Star

ARR (Average Room Rate)2016 vs 2017 % change

Source: STR

2016 201780%70%60%50%40%30%20%10%0%

5-Star 4-Star 3-Star 1- & 2-Star Deluxe StandardApartment Apartment

59%56%

67%59% 57% 57% 55%

47%

59%65%

68%68%

Occupancy Rates 2016 vs 2017

Source: STR

RevPAR (Revenue per Available Room)2016 vs 2017, % change

Source: STR

0%

-5%

-10%

-15%

-20%

-25%

-13%

-18.8% -18.9%

5-Star 4-Star 3-Star 1- & 2-Star-23.7%

Deluxe StandardApartment Apartment

-15.9%

-10.6%

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Growth in accommodation supply

During 2017, the room supply across Qatar’s accommodation market grew by 10% compared to 2016. This supply growth came from the opening of 14 new hotel properties2 and hotel property expansions, bringing 2,666 additional rooms to the accommodation market. Qatar now has a total

accommodation offering of over 25,000 rooms, 22,461 of which are hotel rooms and 2,706 of which are hotel apartments. The largest segment is the 5-Star hotel segment, which included approximately 11,200 rooms across 41 properties at the close of 2017.

Room supply is set to increase significantly in the coming years due to the number of properties currently under development, with 75 projects (with an estimated 17,756 rooms) under various stages of development, as well as other project proposals under consideration.

Existing stock, 2017 Rooms Establishments

All hotels & apartments 25,167 122

All Hotels 22,461 101

5-Star 11,167 41

4-Star 8,434 25

3-Star 2,610 28

1 & 2-Star 250 7

All Hotel Apartments 2,706 21

Standard 660 11

Deluxe 2,046 10

All Properties Under Development Rooms Establishments

All hotels & apartments 17,756 75

All Hotels 12,220 45

5-Star 9,596 27

4-Star 2,369 16

3-Star 255 2

All apartments 509 3

Deluxe 509 3

Not yet classed 5,027 27

2It is important to note that although 14 new accommodation establishments and other hotel expansions brought 2,666 new rooms into Qatar’s accommodation supply in 2017, closures elsewhere have offset these additions to a degree, such that at the end of 2017 there were only 5 additional hotel properties and 2,118 additional rooms, as compared to the end of 2016.

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