Growth in Sight

Low hotel occupancy rates

Kuwait's accommodation facilities have been suffering from less-than-ideal occupancy rates for some time, but better days are in the offing.

The hotel occupancy rate—the ratio of rented hotel rooms to all available ones—is a telling indicator of how well a country’s tourism sector, and in particular its hospitality segment, are faring, at least compared to the sector’s own heyday. And, if the occupancy rate is anything to go by, the Kuwaiti hospitality sector’s performance is not meeting its full potential at the present juncture. According to Statista, a statistics portal, occupancy rates in the country have been hovering at around 53% for the last five years. Although this figure is not a total disappointment, the sector saw better days not so long ago. For example, the occupancy rate came close to 60% in 2013—though that figure, too, was below global industry standards.

Occupancy rates in the UAE, as one of the MENA region’s tourism hubs, rarely go under 75%. The same is true for international tourist destinations such as the UK, while Turkey is said to have touched 100% during the tourism high season.
In all fairness, the context and dynamics of Kuwait’s hospitality sector are dramatically different from those of the UK, Turkey, or the UAE. While the aforementioned countries are visited by a diverse mix of nationalities, Kuwait is mainly popular with travelers from elsewhere in the GCC.

This is also reflected in the country’s visa policies; only those holding Bahraini, Omani, Qatari, Saudi, and Emirati passports are able to enter Kuwait visa-free. Arguably, adopting more easy going visa requirements can influence the occupancy rate in a positive way, but it will not be a foolproof remedy, because there are further issues to contend with.

The current less-than-ideal performance of hotels and accommodation facilities in the country can be, in part, attributed to the GCC region’s makeup: all countries in the region are Arabic-speaking states with more-or-less similar cultures, geographies, and attractions. In recent years, the UAE and Qatar—at least prior to the blockade—have gone out of their ways to brand themselves as world-class tourist destinations, which has resulted in huge profits for their hospitality sectors. This makes the competition for winning more tourists exceptionally fierce in the Middle East. However, it is Saudi Arabia that has been gaining a double advantage. Primarily, Saudi Arabia is a center for religious tourism; the holy Islamic cities of Mecca and Medina have been hosting the annual hajj pilgrimage for centuries, attracting as many as 2.4 million pilgrims each year. At the same time, the recent reforms in Saudi Arabia, heralded by the Crown Prince, Mohammad bin Salman, are setting up the Kingdom to become a viable choice for mainstream tourism, as well. According to World Travel and Tourism Council (WTTC), the contribution of travel and tourism to Saudi Arabia’s GDP has been on the rise since 2014, during which time the occupancy rate has been on the growth path.

Competing for tourists in a largely homogeneous region such as the GCC is a zero-sum game: the competitors’ gain is, unfortunately, Kuwait’s loss. However, in addition to these external factors, there are certain internal factors at play. For example, the launching of a comprehensive legal framework or a strong tourism authority could set the right tune in terms of strategy-making for the sector. After all, tourism authorities across the Middle East have gone a long way in marketing, branding, and ultimately drawing more visitors to their respective countries. Abu Dhabi’s Department of Culture and Tourism (DCT), for instance, routinely launches promotional campaigns to showcase the Emirate’s attractions and local identity, at times targeting a staggering 1.5 billion people. Adopting a similar approach by Kuwait would not go amiss.

Despite the challenges, however, Kuwait has remained steadfast; the country has a number of megaprojects in the pipeline which, if launched according to plan, can make all the difference. Failaka Island is one such initiative which, according to Kuwait Authority for Partnership Projects, will be “a premier, state-of-the-art leisure and tourist destination for the local, regional, and international markets.”

With an investment of around USD20 billion and capitalizing on the island’s rich history, Kuwait is turning it to a center of cultural as well as leisure tourism that offers “a full range of activities and services to cater for the different consumer needs to stimulate visitors all year round.”

Madinat al-Hareer—literally translated as Silk City—is perhaps one of the most futuristic and ambitious masterplans under development, which will come complete with an airport, health centers, business centers, and parks and gardens, among other attractions. This USD130-billion project will be completed by 2035. In the meantime, more early yielding initiatives such as Kuwait National Cultural District (KNCD) that incorporates museums, art galleries, theaters, and Kuwait’s Opera House have come into service, making Kuwait a more desirable place to visit.

Given Kuwait’s openhanded attitude toward investment in cultural and leisure attractions, it is safe to say that the country is on the right track. With many of these projects launched and even more waiting in line to be launched, the occupancy rate is bound to go up in 2019 and 2020.