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Pandemic Challenges Qatar s Retail Market, but FIFA World Cup Ignites Dining Scene: What s the Future?

July 03, 2023
restaurant

The Qatar retail restaurant market has faced significant challenges in recent times, grappling with the impact of the pandemic, shortage of staff, and more. These hurdles have left the industry in a constant struggle to stay afloat. However, a glimmer of hope has emerged on the horizon with the forthcoming FIFA World Cup, which has sparked a remarkable surge in demand for restaurants across the country.
What lies ahead for Qatar's restaurant market as it navigates through these challenging times and embraces the opportunities brought by the World Cup? Read more to find out what the future holds for this dynamic and evolving industry.

1. Pandemic, Short-Staffing Woes, and Rising Operational Costs have left the Restaurant Industry struggling to stay afloat in Qatar

Shortage of Workers
  • With the development of $90 Bn Infrastructure in the country for the World Cup, with lead to a significant increase in demand for skilled foreign labor in the country, with average pay in Qatar becoming 7% higher than UAE
  • As per the report suggested by PwC, more than 60% employers felt the need of skilled workers in the country of which 95% are the foreign workers.
Roads under Construction
  • The construction work ahead of the World Cup has had a negative effect on the restaurant industry, with extensive and lengthy road repairs limiting the presence of potential customers in some areas for months on end.
  • In the neighborhood of Bin Mahmoud, for example, roadworks ongoing for 11 months have left some with little choice but to close up shop, with the pandemic and construction also affecting income.
High Rental Cost
  • Qatar ranks 4th most expensive country in the terms of real estate rent in the world and 1st in the entire GCC, making a big challenge for restaurant to set up retail restaurant business in the country
  • The rental rates saw a new high during the world cup, with huge increase in the occupancy of properties and demand by the shops, leading to an increase of more than 50% in the market
Inventory Management
  • Managing right amount of inventory to ensure the availability of all menu items with minimal wastage is the biggest challenges in the restaurant market, especially with the multi-cuisine restaurants offering different varieties
  • With the major demand coming from tourist during the world cup months, it became even more difficult to understand the preference of potential consumer and their demand
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2. But the FIFA World Cup has remarkably increased the demand for restaurants, shopping malls, hotels, and entertainment platforms in the country

Impact of FIFA in Qatar

KSA, India, Mexico, UK, USA

Tourist Arrivals from top 5 countries

8.1 Lakhs

Non GCC Arrivals in Nov & Dec, 2022

The Pearl, Lusail, Doha, West Bay, Marina

Popular Locations for hotels & restaurants

QAR 735 in Nov from QAR 460 in Sept

Increase in Average Room Rate

80%

Increase in Takeaway Orders during FIFA

65%

Hotel room occupancy rate in Nov & Dec

Qatar World Cup added $6 billion bonanza to GCC food services industry. The Qatar Retail Restaurants Industry witnessed a revenue growth of 40% reaching QAR 14,101.8 Mn in 2022

With accommodation options in Qatar being scant and expensive, Refabricated cabins at fan villages built in the desert on the outskirts of Doha were sold as high as $207 per night

The momentum of the tournament has made a positive impact in Qatar, benefiting more than 3 million food and beverage outlets with Qatari cuisine as most famous.

The two types of outlets, first contains food & drinks, while the second contains gifts, souvenirs, & historical items, were present in about 9 areas for fans zones and inside the stadiums

Key Takeaways

An acceleration in GDP growth in 2022 as sectors like tourism grew by 19% from 2021 owing to the influx of 1.2 million tourists visiting the country to watch FIFA

New Infrastructural Designs like 8 zero-carbon & air-cooled stadiums, malls, etc impacted the economy. Increased hotel capacity for the world cup with 3,900 luxury cruise ship cabins

Food delivery orders in Qatar increased by 80% during the FIFA World Cup, providing eateries with an opportunity to grow in a highly competitive industry

Fostered sales of about 400 food and beverage outlets in the areas surrounding the tournament stadiums and fan zones that host cultural and entertainment events

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3. With the onset of the FIFA World Cup in 2022, Qatar has welcomed a wave of ~600 new restaurants like Fiko, Inara, Chariot, Ergon, Soy Tokyo, and many more

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4. Also, Qatar aims to attract more than 6 million visitors in 2030 aided by Qatar’s National Tourism Strategy 2030 which will act as a catalyst for new hotels to be established in the country

Potential Locations to establish hotels in Qatar

food-map

Qatar Tourism identified geographical zones based on their location to develop tourism products and services in each of the regions like Al Khor, Dukhan, Al Mashabiya, Al Zubarah, etc.

Some new Hotel Openings in Qatar by 2027

food-map

Turkish architectural firm Hayri Atak Architectural Design Studio plans to build a floating hotel by 2025 in Qatar. The eco-floating hotel will have 152 rooms* and will be designed to reduce energy loss and waste production.

The Marriott Group will continue to fortify its position as Qatar’s leading hotel operator, with about 8,800 rooms1 under management by 2025.

IHG has signed a management agreement with Qatari holding company Al Sraiya Hotels & Hospitality Group to debut the Hotel Indigo brand in Qatar. A new-build property, the 200-room Hotel Indigo Doha Lusail is due to open in 2023

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5. Presently, increasing demand for luxury hotels, burgeoning residential development projects, and major government efforts to catalyze the tourism sector have been key drivers for restaurants & hotels

Growth Drivers in Qatar Retail Restaurants & Hotels Market

Rising Establishment of Five-star Hotel

  • Emergence of Qatar as a luxury tourist destination with the entry of more than 1 Mn tourists during FIFA World Cup has led the establishment f 5-star hotels in the country.
  • International hotel players, like Marriott, Radisson, Shangri-La have expanded their investments on the backdrop of rising tourism.
  • In 2022, Qatar opened more than 12 new 5-star hotels, like Wyndham Grand Doha West Bay Beach, St. Regis Marsa Arabia Island & Rixos Gulf Hotel Doha and more

Increasing Residential Development Projects

  • Increasing interests of real-estate players like United Development Company to invest in Qatar have stimulated the demand for villas, apartments, etc.
  • This led to the establishment of new fine-dine restaurants, casual dining outlets, QSRs for people living in and around these residential areas.

Government Initiatives to Boost Tourism Sector

  • The Qatari government has been a key enabler to make the country as a major tourist destination, like Dubai.
  • Qatar National Tourism Sector Strategy 2030 aims to boost the tourism industry’s contribution by 5.2% to the GDP by the year 2030.
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6. Besides it, Out of Restaurants, Malls, and Hotels, the Restaurants Segment is expected to witness higher footfall in the coming years and perform relatively better

Restaurants Hotels Malls
Current Units, 2022 3,748 207 38
Future Addition, 2023-2027 512 63 11
Target Customers Local Population + Tourists Tourists Local population
*Average Weekday Footfall, 2022 60-80 80-100 5-7K
*Average Weekend Footfall, 2022 100-120 140-160 14-16K
*Average Expected Weekday Footfall, 2027 100-120 130-150 8-10K
*Average Expected Weekend Footfall, 2027 160-180 180-200 17-18K
Degree of Popularity chart1 chart2 chart3

With high demand coming from both the domestic population and the international tourist arrivals, the Restaurants Market is expected to gain highest traction, with its availability both in hotels and malls

The Hotel Industry in Qatar is largely catered by international arrivals for business and leisure purposes which limits the Service Addressable Market of the Industry

Tourism would impact the footfall only in few popular malls of the country while the heavy demand comes from the local population creating a larger chunk of footfall in the malls

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Some of the Intelligence Curated by Ken Research in Retail Restaurant Market Space:
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