Older Gulf hotels look to renovate

Older properties across the Gulf will undergo major renovations to keep pace with the quality of new supply, with some even closing for complete refurbishment, according to a new report by hospitality business property advisor Christie + Co.

International Business Outlook 2012, the annual business intelligence report released by the Dubai-based MENA office of Christie + Co, offers an impartial view of the developments within the hotel industry.

City Seasons Abu Dhabi and Mövenpick Doha have recently completed renovations, whilst the Crowne Plaza Deira, Pullman Deira City Centre and Le Meridien Mina Seyahi hotels in Dubai, as well as the Radisson Blu Kuwait are currently undergoing refurbishment, with plenty more expected to follow suit.

“Hotels are becoming more cautious about their operating environment and long-term projections, making it a good time to consider renovations. Similarly, they will focus on overall performance improvement including reviewing operator agreements. Independently run properties will assess alternative management options such as franchising or a move to international brand management,” said Gavin Samson, Director, Christie + Co, MENA.

However, Qatar will take the limelight this year for new hotel development activity, driven by its rapid economic growth and its hosting of the 2022 World Cup. With 10,000 hotel rooms currently, and a further 6,700 potentially in the pipeline, there is still an emphasis on upscale hotel development, but to meet the needs of a changing visitor profile this will quickly morph into the diversified product of a more mature hotel market, and even more new hotel announcements.

Meanwhile, the UAE remains one of the largest economies in the region, behind Saudi Arabia and Iran. Concern with the future hotel supply-demand relationship has moved from Dubai to Abu Dhabi. Whilst Dubai took immediate advantage of the fallout of the leisure and MICE (meetings, incentives, conferences, exhibitions) markets generated by the Arab Spring, much of Abu Dhabi’s hotel supply and related infrastructure is still under development – with initial plans being redrawn and much longer completion dates for projects on Saadiyat and Yas islands.

Both Muscat and Salalah in Oman are committed to growth, with major tourism projects set to move forward this year, such as the Yiti Resort project. Future investment opportunities will be supported by the expansion of both international airports, the growth of Oman Air and improved direct air access for the tourism market.

Saudi Arabia is a growth market, not only with the religious tourism market of Makkah where hotel performance continues to be strong despite increased supply, but in secondary cities and around commercial hubs.

Jordan, Lebanon, Syria and much of Northern Africa show long term potential for new hotel developments, but political volatility in the region is hampering serious investment for now.

“In a region that saw plenty of volatility last year, there are pockets of opportunity and growth potential - although some countries will face an uphill political and economic journey this year before the hotel industry can fully progress towards recovery,” said Samson.

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