THE Arabian Hotel Investment Conference (AHIC) 2010 was attended by more than 600 hospitality industry professionals from 42 countries with a significant increase in participants from the hotel investment sector.
The conference kicked off with the Leaders’ Panel, which looked at how industry CEOs are protecting and growing their businesses and where and how they are unlocking investment opportunities in the region. The participants included Eric Danziger, president and CEO, Wyndham Hotel Group, Kurt Ritter, president and CEO, The Rezidor Hotel Group, Gerald Lawless, executive chairman, Jumeirah Group, Pierre Frédéric Roulot, president, Golden Tulip Hospitality & Louvre Hotels and Sarmad Zok, CEO, Kingdom Hotel Investment.
Mark Wynne-Smith, CEO Europe, Middle East and Africa, Jones Lang LaSalle Hotels, who moderated the panel, commented: “One of the key themes that was discussed was the expected increase in investments in the budget and mid-level hotel sectors in the region. This diversification in the market will help protect against fluctuations in price and occupancy levels caused by the impact of broader economic factors and is an important step as the regional market continues to mature.”
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The Leaders’ Panel |
A Shared Ownership Summit which uncovered significant opportunities to unlock growth in the Middle East and North Africa also came up for discussion. Shared ownership refers to a category of leisure real estate and hospitality products which includes vacation ownership, fractional or shared ownership, private residence clubs and a category of second homes which enables purchasers to earn rental income when not making personal use of their residence. Representatives from Fairmont Raffles Hotels International, Four Seasons Hotels and Resorts, LuxuryBranding and The Registry Collection explored key success factors in the luxury segment.
Claude Attala, managing director of Wyndham Exchange & Rental’s consulting arm NorthCourse, presented the latest shared ownership consumer research findings for the Middle East and North Africa. Highlights included: Dubai, Sharm El Sheikh and Makkah were identified by respondents as the most preferred locations for future vacation ownership (timeshare) purchasers; high-end fractional products are sought in Dubai, Sharm El Sheikh, Makkah, Beirut and Cairo and interest in Abu Dhabi fractionals has also increased.
Further sessions at AHIC 2010 offered insight into every facet of the hotel investment market, starting at the macro-economic factors driving demand in the region, assessing new hotel development projects by location and market conditions and providing advice on how to finance and manage projects.
Nenad Pacek, president of Global Success Advisors and co-founder of CEEMEA Business Group, said: “There can be no doubt that the global economic crisis affected every market out there, in both the developed and emerging markets, but as the crisis bottoms out and the recovery gathers pace the emerging Asian countries and the Mena region offer the best opportunities for growth.”
Sheikh Mubarak Abdullah Al Mubarak Al Sabah, chairman of Action Hotels, observed: “The Middle East market, while common in some characteristics, is diverse and each country has its own strategies and priorities for investment and travel. In general, it’s not my view that markets in the region are saturated, but instead it is more about growth and market movement.”
One of several new initiatives at AHIC 2010 this year was the ‘How to finance your project’ panel, reflecting the changing economic climate for securing funding. Gaurav Shivpuri, director capital markets of Jones Lang LaSalle Mena, who was featured on the panel, commented: “Regional investors and financiers today are much more prudent when it comes to investing in real estate and scrutinise every little detail of a project prior to financing or investing in it.
“I would recommend that developers/investors seek advice from experts, as well as carefully consider location and market characteristics when undertaking new projects. Moreover, putting together an experienced development and management team is also important to allay delivery and cost overrun fears that investors and financiers have today.”
A panel also addressed how the industry can foster win-win owner operator relationships and improved synergies. Michael Scully, CEO of First & Foremost and managing director of Hospitality at Seven Tides, stressed that the difficulty in raising capital is putting even more pressure on properties to perform.
Scully was part of a panel discussion entitled ‘Owners and operators hard talk – partnerships that work and why’, alongside Jean-Paul Herzog, president MEA, Hilton Worldwide, Kirk Kinsell, president Europe, Africa and Middle East, IHG and Richard Riley, CEO, Abu Dhabi National Hotels.
“I believe that in the modern day it is imperative that owners are able to get out of contracts with non-performing operators. Previous contracts gave the operator the upper hand in negotiations,” said Scully.
“Due to the difficulty in raising capital, operators will be held far more accountable for returns on investment in an environment where benchmarks will be tougher and loan commitments take priority.”