ARABIA continues to remain a favourite among investors and operators in the tourism and hospitality sector, in particular those in the budget segment, said Jonathan Worsley, co-organiser of the Arabian Hotel Investment Conference.
Industry figures show that the region is still considered a hot spot, although 10 and 20 per cent of the 500 plus planned hotel projects in GCC have been put on hold.
“Recent numbers issued by Jones Lang LaSalle estimates that 680,000 new hotel rooms will enter the market next year in the greater Middle East and North Africa region - compared to an original prediction of more than 800,000. It seems that many are jumping on the budget hotel bandwagon that is sweeping through the GCC.”
“Indeed, the case for low cost hotels and the buoyant entry of new brands into the region is high among the key topics under discussion during the three-day event,” he said.
Worsley suggested that budget hotels are set to revolutionise the scale of choice for the consumer and open up new market categories for business and leisure travel.
He noted that Emirates and Whitbread Hotels have entered into a joint venture, with the Premier Inn brand and plan to operate three hotels in Dubai later this year.
Darroch Crawford, managing director Premier Inn, said that the launch had been well received. “The limited service hotel sector presents the best opportunity in the hospitality sector in these times as even more individuals, and certainly most businesses, look for value for money. We are offering guaranteed consistency at a low price that will be in big demand.
“Lower operating costs allow budget hotels to make excellent returns, even at modest occupancy levels. There are good investment opportunities, particularly as land and construction costs are returning to more realistic levels. The best opportunities lie in GCC capital cities where the limited service sector currently has little or no representation.”
Crawford’s view is echoed by Sami A Ansari, CEO of Ishraq Gulf Real Estate, the developer behind Holiday Inn Express. Ansari said that his hotels in Dubai have outperformed the market occupancy average in the city by as much as 15 per cent in the past four months.
“Budget hotels have historically been shown to be recession resilient. The model continues to generate targeted profits for investors, as they operate on much lower margins than their full service rivals,” he said.
“We will continue our development of the Holiday Inn Express brand in the region at full speed. We are opening of our fourth property near Dubai airport this summer. Construction is at full speed in Bahrain, Abu Dhabi, Muscat, Fujairah and Doha.”
Other low cost brands announced for the region include Hilton’s Garden Inn in Saudi Arabia, easyHotels in Dubai and Rotana’s Centro in Dubai and Abu Dhabi.
However, new top names were also present, such as the W in Doha, Radisson’s Missoni in Kuwait and Oman, plus Langham and Taj’s Doha projects, according to Worsley.
“Meanwhile, Abu Dhabi will have Anantara, Angsana, Conrad, Dusit, Rocco Forte, Hard Rock, Le Bristol, Oberoi, Regent, St Regis, Westin, Wyndham, yotel and Hilton’s new brand Denizen to name a few.”
Another new player, The Address Hotels & Resorts from Emaar, is looking both in the GCC and in North Africa in its initial expansion phase.