The Qatar Tourism Authority (QTA) has threatened to take legal action against several local hotels that increased their room rates by 400 to 1,200 percent of the maximum allowable rate earlier this month.
The spike in prices appeared to coincide with a school holiday from March 19-28 in Saudi Arabia, which is Qatar’s largest source of tourists.
“The exaggerated increase in the prices” created “a negative image about the tourism industry in the state and the national economy, especially since it coincides with the season for receiving tourists and visitors from the Gulf countries,” QTA said in a statement published on .
“These irresponsible actions on behalf of some hotels and hotel apartments could waste the efforts exerted by the partners and employees of the tourism sector and QTA to promote Qatar as a vacation hub,” the statement added.
Several tourists from Saudi Arabia were quoted in Al Raya newspaper, complaining about the hike in hotel prices. They said some hotels were charging more than QR6,000 (US$1,648) a night, which they called “an unprecedented rate in the Gulf countries,” according to the local newspaper.
The QTA said it monitors room prices online and sent a warning to several hotels, instructing them to reduce their rates. It also took further measures and set up a QTA team to investigate “the continuance of the violation by any hotel.”
The statement adds that legal procedures will be taken against hotels that continue to increase their prices.
Hotels in Qatar must have their maximum rates approved by QTA annually, Amin Al Darawsheh – the sales director at the Torch Doha Hotel – told Doha News. He said several factors are taken into consideration, such as how many stars it carries and the extent of its services offered.
He said that rates fluctuate throughout the year due to changing seasonal demand and that The Torch – which is a five-star property – charged a maximum of QR1,200 ($330) a night in March and was fully booked this month.
However, Al Darawsheh said he saw room rates at some competing hotels climb to QR9,000 ($2,471) per night, which he called “unrealistic” and “greedy.”
“Increasing prices that much is bad for (any hotel’s) reputation and damages efforts to attract (tourists),” he said. “These hotels should be punished,” he added.
He added that hotel prices usually increase when the demand is high, in addition to last-minute bookings, which is usually the case with visitors from the Gulf countries.
This isn’t the first time that hotels in Qatar have appeared to increase room rates in response to rising demand.
The average daily room rate in January was US$273, according to a recent report from business consulting firm Ernst & Young (EY). That’s up nearly 12 percent from $244 a year earlier, a jump that EY attributes to the Men’s Handball World Championship hosted by Qatar that month.
Outside of the tournament, however, hotel room rates have held steady in Qatar as new lower-priced, mid-range options for travellers put pressure on luxury properties to keep their fees in check, EY said.
“The increase in internationally operated three and four-star hotels meant that it became more difficult for five-star hotels to justify their premium room rates,” Yousef Wahbah, EY’s head of real estate transactions for the MENA region, said in a statement.
This diversification of the market represents a significant shift in Qatar’s hotel industry, which has historically been dominated by luxury properties catering to business travellers and well-heeled tourists.
But despite the opening of new lower-cost hotels in Qatar, 2014 was still a healthy year for the sector, EY said. Doha’s hotel room occupancy rate of 70 percent was one of the highest in the region, which helped boost revenue per available room by 13.4 percent, EY said.
The number of visitors to Qatar is already growing rapidly. Last year, 2.83 million tourists visited Qatar, up 8.2 percent over 2013, according to QTA figures.
“Qatar’s hospitality industry is expected to thrive in 2015 and beyond,” Wahbah stated.
Last fall, business advisory firm Deloitte said although the number of visitors to Qatar is increasing rapidly, the number of hotels is growing even faster as hospitality businesses construct new accommodations to meet demand for 2022 World Cup.