A boycott imposed by four Arab nations that accuse Qatar of supporting terrorism is squeezing the tourism sector, and Doha's hotels, which would normally be full in the Eid al-Fitr holiday, have seen steep falls in their occupancy rates.
A Reuters survey of five major hotels found average occupancy was around 57 percent at the start of the Eid festival on Sunday, which marks the end of the Ramadan fasting month, when friends and families eat and pray together and take holidays.
"We're usually packed with Saudis and Bahrainis, but not this year," a staff member at a five-star hotel said.
But Qatar's official news agency QNA cited officials and managers in the hotel sector reporting hotel occupancy over the holiday period stood at more than 95 percent and denied reports of lower rates.
"They pointed to high tourist flows from the Sultanate of Oman and the State of Kuwait and a significant increase in demand from domestic tourism," QNA said.
Free night at some hotels
QNA said an offer by some hotels to offer guests staying two nights at hotels a third night free had helped win high occupancy and that the sector has shown its ability to "diversify away from traditional markets."
Aviation analyst Will Horton estimated Hamad International Airport, one of the Middle East's busiest, would handle 76 percent as many flights in early July compared with the same period last year, a loss of about 27,000 passengers a day.
The airport said in a statement Tuesday that it had experienced a "very busy" Eid period with 580,000 passengers passing through between June 19 and June 25. It did not give comparative figures for last year's Eid.
Visitors from the rest of the Gulf Cooperation Council usually account for almost half of all visitors to Qatar. So a decision by Saudi Arabia, the UAE, Bahrain and Egypt to cut diplomatic and transport ties on June 5 hit traffic hard.
"Doha in early July, assuming the restrictions remain, will have less capacity than a year ago — a confronting figure for a region where every month sets year-on-year records," said Horton, senior analyst at Australia's CAPA Centre for Aviation.
There is no breakthrough in sight for the crisis, in which the four Arab nations issued an ultimatum to Doha to close Al Jazeera television, curb ties with Iran, shut a Turkish base and pay reparations. A defiant Doha has denied accusations of supporting terrorism and says the demands are unrealistic.
Hundreds of weekly flights to and from Qatar have already been canceled because of the dispute. Hamad airport stands to lose fees paid by airlines and passengers, as well as terminal revenue from duty free shops and restaurants.
Air links suspended by the four Arab states represented around 25 percent of flights by state-owned Qatar Airways, one of the region's big three carriers.
Qatar Airways, whose hub is Hamad airport, said on Tuesday that 510,949 of its passengers had traveled through the airport in the past seven days. It did not give comparative figures.
Qatar Airways Chief Executive Akbar al-Baker had said on June 14 the majority of its operations had not been affected by restrictions imposed by the four Arab states.
Elsewhere in the tourist sector, hotels, restaurants and other facilities have had to find new sources of services and goods — in some cases, at higher cost — because of the boycott, said Rashid Aboobacker, senior director at TRI Consulting in Dubai.
"A substantial drop in visitor arrivals is likely to force hotel and real estate developers to re-evaluate their strategies and priorities, potentially causing delays to some of the ongoing [tourism] projects," he said.
Qatar's 2022 FIFA World Cup organizing committee has said sanctions have not affected preparations for the tournament, and that alternative sources for construction materials have been secured.
Qatar has said 46,000 rooms will be available to host fans by the time of the World Cup. In March, it had 119 hotels with 23,347 rooms, according to the tourism authority.
Developing business and leisure tourism is part of Qatar's drive to develop its economy away from reliance on oil and gas revenue.
Doha aims to raise the tourism sector's contribution to GDP to 5.2 percent by 2030 from around 4.1 percent now, while raising the number of people employed by nearly 70 percent to 127,900.