Deal to finance Express By Holiday Inn secured
A consortium of 12 regional investors will finance the $150 million launch and development of more than 20 Express by Holiday Inn hotels across five countries in the GCC.
The owning company for the hotels, Ishraq, will control the rights to the three-star brand – the first international brand of its kind to enter the Arabian Gulf countries on this scale – across the GCC, with the exception of Saudi Arabia.
Dubai International Capital (DIC), the international investment arm of Dubai Holding, is Ishraq’s anchor investor and the key player in the deal, which was structured, arranged and placed by Addax Investment Bank, the Middle East investment bank based in Bahrain.
The 20 properties will be operated on behalf of Ishraq by Hospitality Management Services Middle East (HMS), the master franchise developer and operator of Express by Holiday Inn in the Gulf states. The first property will be built at Knowledge Village, part of the Dubai Technology and Media Free Zone (Tecom). For DIC, the international investment arm of Dubai Holding, this is the fourth major strategic investment outside Dubai in recent months.
Sameer Al Ansari, CEO of DIC, said: “There is a huge gap in the market for branded budget hotels, which we believe are essential to maintain the target visitor figures for the next ten years in the Gulf. Express by Holiday Inn is the largest budget hotel brand in the world, with proven results, and the launch in the Middle East will help fill the gap for affordable accommodation at guaranteed quality.”
Thierry Loué, managing director of the operator HMS, said: “Express by Holiday Inn is the world’s most successful and profitable budget hotel brand with more than 1,500 hotels worldwide, and a new Express hotel opening every four days. The move to market will be fast with the first hotels opening in Dubai at the end of 2006 and the rest of the hotels open by 2010. In addition, from an operating point of view, this sector offers higher returns on investment than luxury properties, as a consequence of reduced investment and operating costs.”
To address the identified regional market need for value hotel accommodation, particularly for business travel, the development of the Express by Holiday Inn brand will see properties located within commercial centres, along major road arteries and in around business and industrial parks. Chris Moloney, COO, InterContinental Hotels Group (IHG), Middle East and Africa, explained: “There is a need for this type of internationally branded three star hotels that provide quality service at value for money.”