Fairmont Hotels & Resorts may consider going public over the next three to five years, a top company official told Emirates Business.
"We don't have any specific IPO plans right now but what we have thought about is as we transition the company from an owner of real estate to more of a branded management company, to support the level of growth that we're undertaking," said the company's president, Thomas Storey, speaking on the sidelines of the Arabian Travel Market in Dubai yesterday. However, he said the move would be a function of the public market at any given point in time and would depend on what other opportunities is available.
According to Storey, the region's hotel industry will continue to see solid growth in the next seven to 10 years despite the sinking dollar that is affecting businesses in the West.
He said the company is seeing greater turnover year-on-year in its hotels, with a number of factors in the region supporting its growth.
"We're seeing the high and luxury-end of the market growing about 10 per cent a year in pure turnover. That's a very solid growth; if you compare it to other parts of the world, it would be one of the best," said Storey.
"In this region in particular the growth is substantial. With a GDP of 6.5 per cent compounded and the significant third-party investment now coming in, all of that is stimulating the economy."
Storey added that lengthening construction timelines and increasing development costs are key challenges for the company.
"Probably the biggest challenge we have faced is the delay. Also the shifting configuration of some of the projects – as laws have changed, for example height restrictions or parking requirements, building those into the project as we go has been a bit of a challenge," said Storey.
The company provides about 10-20 per cent of the equity invested in projects with its partners, either in the form of equity, loans to contributing resources such as technical services.
According to Storey, capital is not typically the constraint on development here in the region.
"The real constraint is being able to bring the caliber of resources to support the quality of projects that are being developed. It's a question of having the capacity to grow as quickly as the opportunities present themselves in the region," he said.
Increase in rooms
Fairmont Hotels & Resorts is expecting to increase the number of rooms under its management around the world by 80-90 per cent over the next three to five years.
The company's president Thomas Storey said it expects to launch four to five properties in the next three to five years, doubling its employee base from 25,000 to 50,000. The firm last week announced it is set to manage a new hotel in Makkah, which is scheduled to begin operations in August 2009, with phase one opening in September.
The nearly SAR10,000m hotel, which is being developed by Saudi Binladen Company, is expected to be the largest in the Middle East.