Navigating Hotel Transactions and Valuations in the GCC
By Hala Matar Choufany
The Gulf Cooperation Council region in the Middle East presents a unique and complex landscape for hotel investment.
While the hospitality sector offers immense potential for growth and profitability, it is accompanied by risks that demand careful consideration. This article explores the factors influencing hotel valuations, challenges affecting transactions and strategies for aligning investments with market realities.
The current state of hotel supply and demand
The GCC region boasts a significant and rapidly expanding hotel supply, currently offering approximately 500,000 hotel keys. Of these, 46% are located in the United Arab Emirates and 34% in Saudi Arabia. Over the next five to seven years, the region is expected to add 300,000 keys, bringing the total to nearly 800,000.
Despite this growth, hotel transactions remain limited, with only around 5,000 keys exchanging hands in major markets such as Dubai and Riyadh over the past five years. A key barrier is the disconnect between owners’ high asking prices and actual hotel values, which are typically determined by potential income and market dynamics.