While the political outlook in the Middle East remains in a state of flux, hotel investment in the region continues apace. Bob Papworth reports
SOMETHING STRANGE IS STIRRING in the Middle East. In a region renowned for the over-the-top opulence of its travel products, there appears to be the beginnings of a shift, if not downmarket, then at least down the price scale.
Of course, it is an inconvenient travel management truth that, aside from pure physical geography, the Middle East simply does not exist as a cohesive entity.
While most other world regions are glued together by cultural commonalities, the Middle East is defined by the exact opposite: Islam versus Christianity; Sunni versus Shi’ite; hardliners versus liberals; fantastic wealth versus abject poverty – the region is riven with contrasts, if not outright conflicts.
Iran and Syria are now pariah states; Dubai most definitely isn’t. The hardline rule prevailing in the Saudi Arabia is a world away from the relatively liberal Jordan.
Bahrain is going through the Arab Spring mill but Iraq, which has endured much worse, is ‘enjoying’ a significant resurgence.
Against this backdrop, trends are difficult to identify. However, the exception to this chaotic norm comes in the shape of the hospitality sector. In very general terms, a posh hotel is a posh hotel, whether it is in Manama or Muscat, Doha or Damascus, so comparisons can be made and conclusions drawn.
DIFFERING VALUES
Perhaps the most telling statistics come from hotel industry number-crunchers STR Global, which recently revealed that of the 68 international chain hotels that made their debuts in the Middle East/North Africa (MENA) region in 2012, only ten were in the ‘upper upscale’ bracket.
Looking ahead through the lengthy list of this year’s planned openings, while the Jumeirahs and the Kempinskis of this world still feature strongly, so too do Tulip Inns and Best Westerns; Park Inns sit alongside Pullmans; Premier Inns are springing up everywhere.
Until relatively recently, Dubai was close to the top in HRG’s annual corporate room rate rankings. This year it is in 26th place. The average overnight cost of £154.18 is more than £100 cheaper than in top-placed Moscow.
According to Paris-based MKG Hospitality, revenue per available room (revpar) across the MENA region rose 8 per cent last year – but that increase was largely due to recovery in North Africa, where hotels had a miserable 2011.
Revenues in Qatar were hit by over-supply, while the bloody conflict in Syria dented hotelier fortunes in neighbouring Lebanon. Kuwaiti revpar rose, but with occupancy levels bumping along at little more than 50 per cent – similar to those in Riyadh – that was hardly cause for celebration.
MKG director of development, Vanguelis Panayotis, warns: “Although there is recovery, the situation is still quite fragile and certainly susceptible to another dip.”
Investors seem undeterred, with scores of new properties opening across the region. Increased supply at the top end of the market means tougher competition, and that should help drive down prices.
However, it is the growing number of mid-market, and even budget, offerings that will not only begin to correct a sectoral imbalance and give travel buyers greater choice, but also – hopefully for buyers – push average room rates lower.
ABU DHABI
THIS MONTH is set to see the debut of Starwood’s 283-room St Regis Abu Dhabi, one of a string of new hotels opening in the emirate this year. This will be followed in July by the Novotel Al Bustan, a 361-room property with function spaces including a 1,035sq m ballroom, minutes from the Abu Dhabi National Exhibition Centre.
Also opening this year are the 258-suite Capital Centre Arjaan by Rotana and, at Abu Dhabi International airport, a 300-room Premier Inn. They are due to be joined in 2014 by the 315-room Abu Dhabi Marriott, the 195-room Courtyard by Marriott Central Market and a 64-unit Marriott Executive Apartments property; the 323-room Four Seasons Abu Dhabi Sowwah; Rezidor Group’s 437-room Regent Abu Dhabi; and the 275-room Intercontinental Al Raha Beach.
BAHRAIN
IN FEBRUARY IN BAHRAIN, negotiations began between the government and its supporters, and opposition groups, to end the Arab Spring-inspired political unrest that has dogged the Kingdom for the last two years. However, demonstrations and protests marked the second anniversary – on Valentine’s Day – of the start of Bahrain’s troubles, leading to various factions boycotting the talks. The UK’s Foreign and Commonwealth Office were still warning travellers to “maintain a high level of security awareness”.
Despite the unrest, a new survey by Ernst and Young says that Bahrain’s hotel occupancy rates rose 7 per cent last year, “pointing to a rebound in the Kingdom’s tourism and business sectors”. In particular, the report says, increased attendance at trade events such as Jewelry Arabia, and the Oil and Gas Trade Forum, pushed visitor numbers higher, bringing average room rates down, albeit by only 0.4 per cent.
Downward pressure on prices could continue this year with a host of new hotels due to come on stream. Biggest of the lot is the 407-room Bahrain Rotana, ahead of Marriott’s 318-room Renaissance Bahrain Amwaj Island, due to open this month. Also new this year are Intercontinental’s Holiday Inn Bahrain Al Seef, with 240 rooms, the 215-room Tulip Inn, and the Swiss-Belhotel Seef, with 146 rooms.
DUBAI
THE HOSPITALITY INDUSTRY’S love affair with Dubai shows no sign of cooling, with more than 5,000 new rooms due to be added to the supply in the next two to three years.
One of the most recent additions is Movenpick’s fifth property in Dubai, Movenpick Hotel Apartments The Square, the first international addition in the Al Mamzar district of Deira, Dubai’s historical centre.
Also new this year are three Marriott properties and a further three from France’s Accor Group. The Dubai Marriott Healthcare City (352 rooms) and the Renaissance Dubai Motor City (354 rooms) will be accompanied by a 128-unit Marriott Executive Apartments – also in Healthcare City – while Accor is opening a Novotel, a Sofitel and a Pullman, with 187 apartments and more than 1,000 rooms between them.
Other newcomers this year are a 165-unit Staybridge Suites property and the Coral International Sports City, with 290 rooms. Another Sofitel, with 350 rooms, opens on Sheikh Zayed Road next year, along with a 407-room Crowne Plaza, the 480-room Sheraton Dubai, and the Rezidor Group’s 310-room Park Inn Dubai Airport Free Zone.
QATAR
WITH AN EXISTING GLUT of upscale hotels, and more top-end properties on the way, Qatar this year mixes things up with the opening of the 200-room Premier Inn Doha Education City, the budget group’s first foray into the country.
The trend is not being bucked for long, however. The 300-room Four Seasons Hotel Doha at The Pearl makes its debut in 2014, as does the Marsa Malaz Hotel Kempinski, with 278 rooms.
They will be followed in 2015 by the five-star Shaza Doha, with 180-rooms, Rezidor’s 300-room Missoni Doha, and two Accor properties – the 215-room M Gallery Doha Musheireb, and the massive Pullman Doha West Bay, with 371 rooms and 97 apartments.
IRAQ
BEST WESTERN, WHICH MADE its debut in Saudi capital Riyadh last year – and opened its first hotels in Bahrain, Oman and Kuwait – continues its aggressive Middle East expansion with the opening this year of the 82-room Best Western Premier Erbil Airport in northern Iraq.
A second Erbil property, in the city centre, is already under construction and is scheduled to open in the first quarter of next year. Glenn de Souza, Best Western’s Asia and Middle East vice-president, expects to have more than 20 properties open in the Middle East by 2015. Erbil, he says, has the potential to become “one of the most prominent trading centres in Iraq”.
The fourth-largest city in the country, Erbil is certainly attracting hoteliers’ attention. A 200-room Marriott and a 75-unit Marriott Executive Apartments property are slated to open next year, while Starwood is planning three new hotels – a 260-room Sheraton, a Four Points by Sheraton (250 rooms) and an Aloft-branded property – in 2015. The 300-room Hilton Erbil Hotel and Spa is scheduled to open in 2016.
KUWAIT
KUWAITI PLANS TO DEVELOP a series of ultra-luxury ‘seven-star’ hotels have run into problems – because local hoteliers don’t want them. The Kuwait Municipality’s scheme to encourage private-sector investment in the VIP-only properties is being opposed by the Kuwait Hotel Owners Association (KHOA), which says over-supply has already forced occupancy levels down to just 51 per cent, and with an extra 3,000 rooms coming on stream in the next three years.
KHOA will, therefore, probably not welcome this year’s opening of the Jumeirah Messilah Beach Hotel and Spa, which will add 307 rooms, 80 apartments and 12 chalets into the equation.
Intercontinental Hotels Group will compound the despair with the planned 2015 opening of the 220-room Intercontinental Kuwait Downtown and the 120-unit Staybridge Suites Kuwait Farwaniya.
OMAN
DESCRIBED AS A “beachfront business hotel”, the 213-room Crowne Plaza Duqm is now due to open towards the end of this year. Some 600km from Muscat, Duqm is being developed as a major new commercial port city in the southeast of Oman.
A number of new resorts are planned along Oman’s extensive coastline – Radisson Blu, Intercontinental, Missoni and Four Seasons flags will be flying within the next few years – but Muscat’s room-count is rising, too. Starwood proposes to bring its W and Element brands to the Omani capital (in 2014 and 2016, with 250 and 100 rooms, respectively) and 2015 will see the opening of the 285-room Golden Tulip Muscat.