Hotel trends analyses (Qatar 2013 - Q1 2016)

HOTELS PERFORMANCE IN DOHA

(TRENDS ANALYSES FOR THE PERIOD 2013 – Q1 2016)

As per our discussion with Mr. Mohammed Al Ali, ARIANE Real Estate wishes to explore the possibility of
creating new hotel management company with purpose to manage its own properties at the beginning, and
later take other properties under management.

Building of recognizable brand of the management company, which is first going to operate own properties and
later offer management to others, will most definitely be of significant assistance in the negotiations for
acquiring new management agreements.

The segment chosen for building hotel brand, of managing/operating midscale (3*) and upscale (4*) hotels, can
be considered as right choice.

There are already some of the major players that penetrated this segment, which earlier was not the case, such
as Rotana, Wyndham, Accor, Millennium , Best Western etc. This proves operation of such properties feasible in
the future.

By obtaining these information ARIANE Real Estate can initiate preparation of extensive detailed SWOT
(Strengths, Weaknesses, Opportunities, Threats) analyses based on whose findings the Management can make
most appropriate and feasible decisions regarding the future steps and time frames of the activities of its
planned new hospitality development and management section.

ARIANE REAL ESTATE

HOSPITALITY PROJECTS

Hotel Hotel Hotel Hotel
class rooms
Area Suites apartments apartments Area m2 Stage
Al Erkyah 4*
keys class

473

707 DL

Quataifiya 7* 274 150 55,000
Marina 5*
5* 352 130 50,000

469
29,000

108 DL

5* 469
Marina Hotel 29,000

108 DL

3* 5,117 Concept
4*
Yasmeen City 6,900 Concept

DL 30,237 Concept

Al Thumama 2* 250 Concept
Al Mansora 3*
Old Airport 3* 250 Concept
4*
250 Concept

310 Concept

40 Concept

Um Salal 2* 250 7,504 Concept
3*
Ariane City (Al 2* 300 7,863 Concept
Kheraiza) 3*
140 Concept

140 Concept

Al Ruwais 5* 210 37,495 Concept

MARKET TRENDS

Hotel industry in Doha was rapidly expanding in the last decade, and from underdeveloped hotel market with only few hotels at
the beginning it presently reached respectable number (119) of hotel properties that are already operating in the market.

As presented in the available official data from the reports published by QTA, there is an ongoing trend of drop in the occupancy
levels as well drop in the room rates offered, and revenues per available room generated in all hotel categories.

Once new hotels are going to enter the market, these downward trends are expected to continue, making even bigger pressure
to the operation of the market participants.

PERFORMANCE INDICATORS (2013 - Q1 2016)

2013 2014 2015 Q1 2016
Arr Occ Arr RevPar
Occ RevPar Occ Arr RevPar Occ Arr RevPar 66% 581 383
785 389 77% 346 266
Deluxe apart 395 73% 536 275 68% 729 497
279 512 75% 337 253
Stendard apart 255 83% 331 261 61% 303 186
211 66% 200 133
5 stars 61% 480 71% 735 525 67% 763 149

4 stars 71% 280 76% 390 296 76% 342

3 stars 67% 186 74% 292 215 66% 318

2&1 stars 66% 170 72% 249 180 72% 206

Rapid development of new properties is creating increased competition between the participants in the market.

Maintaining market share presently is much more complicated, and this coupled with the impact of the present economic
downturn in the world economy, which also affected Qatar, is already affecting the offered room rates and the occupancy.
This trend is expected to continue in the forthcoming period.

In order to show the effects of the impact to each hotel category, I separated each category, and displayed the historical data for
each of them.

5 STARS HOTELS 4 STARS HOTELS

2013 2014 2015 Q1 2016 2013 2014 2015 Q1 2016
67% 68% 76% 75%
OCC 61% 71% 763 729 OCC 71% 76% 342 337
ARR (QR) 512 497 ARR (QR) 261 253
REVPAR (QR) 785 735 REVPAR (QR) 395 390
Q1 2016 Q1 2016
OCC 480 525 61% OCC 280 296 66%
ARR (QR) 303 ARR (QR) 200
REVPAR (QR) 3 STARS HOTELS 186 REVPAR (QR) 1&2 STARS HOTELS 133

2013 2014 2015 2013 2014 2015
66%
67% 74% 318 66% 72% 72%
211
279 292 255 249 206

186 215 170 180 149

1. Five star properties – category with biggest room inventory, over 40% from all hotel rooms available in the market.
This category proved to be most resilient to the market effects. The impact on both, occupancy and offered room rates was
smallest, and accordingly the effect on revenues per available room is much milder compared to the impact on the other
categories.
Also, each of the hotels of this category has sizable facilities that are generating additional income, in addition to the room
revenues.

2. Four star properties – the second biggest room inventory with over 35% of the total room inventory.
In order to defend its occupancy levels, which are highest of all categories, these properties made significant sacrifice on the
room rates by reducing them every year, so finally the difference between rates in 2013 and Q1 of 2016 is 15% .
However the impact on RevPar was smaller, only 10%, as they managed to maintain high occupancy.

3. Three star properties – this category Is rather specific.
Since 2013 the offered room rates were almost always increasing year on year, with small decline in Q1 2016.
At present the offered room rates are just 10% lower than the same in 4* category. Most probably this is the reason of sizable
decline in occupancy which resulted with decline in the RevPar, so in Q1 2016 RevPar is reduced back to the levels of 2013.

4. One and Two star properties – this is the category with smallest room inventory.
This hotel category is the biggest looser on the market. It is continuously facing reductions of room rates and accordingly the
RevPar. The current earnings makes feasibility of these properties rather questionable.

ACCOMMODATION SUPPLY

(EXISTING AND UNDER CONSTRUCTION)

In order to provide sufficient hotel rooms for World Cup 2022 significant supply of new hotel properties are under development
and expected to enter in the following period.

EXISTING STOCK IN 2015 UNDER CONSTRUCTION IN 2015 TOTAL

ROOMS % OF TOTAL ENTITIES ROOMS % OF TOTAL ENTITIES ROOMS % OF TOTAL ENTITIES
20,713 119 26,652 69 47,365 188
Total ALL 2,454 9% 4 2,454 5% 4
Not yet class 1,363 7% 12 1,616 6% 8 2,979 6% 20
Deluxe apart 555 3% 9 0% 1 1% 10
Stendard apart 1,918 9% 21 98 16% 13 653 13% 34
Total apart 4,168 44% 17 6,086 25% 17
Not yet class 8,873 43% 39 11,810 28% 22 11,810 35% 61
5 stars 7,326 35% 23 7,488 8% 10 16,361 20% 33
4 stars 2,342 11% 28 2,223 3% 6 9,549 7% 34
3 stars 254 1% 8 863 0% 1 3,205 1% 9
2&1 stars 18,795 91% 98 100 84% 56 354 87% 154
Total hotels 22,484 41,279

As shown in the spreadsheet above, there was increase of inventory in 2015 of 30% compared to 2014. The number of
properties/rooms currently under construction is going to increase the rooms inventory to more than double compared to 2015.

Once those properties enter the market, the operation of the hotels in the local market is going to be rather challenging.

Although, as per the Qatar vision, many new big events are expected to take place in the future years that should increase the influx
of customers in the country. (as in the QTA report following).