hotelier middle east sept 2013 gcc hotel pipeline survey

HOTELIER MIDDLE EA ST | September 2013 | Volume 12 Issue 09

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Viability Management Consultants’ latest pipeline survey focused on the five ‘hot markets’ for hotel development in the Gulf — Abu Dhabi, Dubai, Doha, Makkah and Riyadh — and revealed fast-paced growth, the emergence of exciting new brands

and mammoth master projects

Dubai Pearl will introduce brands such as Bellagio and MGM.

Millennium Bab Al Qasr, Abu Dhabi.

Some 70% of the pipeline keys will be rated five-star, 23% four-star and just 7%, three-star”

Beyond the supply confirmed by the chains, Abu Dhabi has numerous exciting new tourist and downtown areas that should see scores more ho-tels coming up in the medium term, both on its natural offshore islands and in mainland suburbs. Among the former are the sizeable Saadiyat, Reem, Al Maryah, Yas and Lulu is-

In terms of geographical distribution, the largest slice of the pie predictably went to Dubai, with the chains reporting that 31% of their future pipeline, or 20,227 keys in 56 hotels and hotel residences, would be located there. Next was Makkah, with 15,981 keys in just 25, larger-than-average properties, repre-senting 25% of the pipeline. The rest of the five-city pie was divided between Abu Dhabi, Doha and Riyadh, with 17%, 14% and 13% of the total keys respectively (see chart on page 60).

According to the chains, we should see around 15,000 keys coming on line each year from 2013 to 2016, with just under 4000 known at this stage for 2017. Some 70% of the pipeline keys will be rated five-star, 23% four-star and just 7%, three-star. Hilton Worldwide reported the largest number of keys in the five cities, at 8211, followed some way behind by Starwood, with 5161; Millennium (4636); Marriott (4535); and Accor (3530). There were several unexpected newcomers in the top 20, including Damac, Anjum and Elaf.

ABU DHABI MOVES UPSCALEWith 36 confirmed chain hotel projects promising 10,745 fu-ture keys, Abu Dhabi continues to be a focus for local hero,

BOOM TIMES RETURN TO THE GULF

B y G u y W i l k i n s o n

MARKET UPDATE

Rotana, which is adding four new ho-tels to its existing 11 properties there. Marriott is also planning four, includ-ing the region’s first Edition hotel, a concept created with boutique hotel pioneer Ian Schrager. Millennium & Copthorne and Mövenpick will each open three new hotels in the city.

The UAE capital has become something of a lure for upper upscale brands. Over the coming years, Four Seasons will become a neighbour to the newly-opened Rosewood on Al Maryah Island, while Millennium & Copthorne Middle East will open the spectacular 674-key Millennium Bab Al Qasr next to the Etihad Towers and a Biltmore hotel in Al Buteen — the second to be so named after the original in Los Angeles. Abu Dhabi now has its second St. Regis and is set to get its first W hotel, following Starwood’s deployment of this brand in Doha. Perhaps most impressive will be the second Fairmont hotel in the UAE capital, a grand Arabic-style edifice destined to become a major landmark on the Breakwater near the Marina Mall, with 812 keys.

In April and May of this year, Viability Management Consultants canvassed 111 hotel chains active in the Middle East, 49 — or 44% — of which confirmed they were planning to open new hotels. In total, these operators will be opening 189 hotels and hotel apartment buildings with 64,063 keys across the five subject cities between now and 2017. By comparison, the pipeline for the entire GCC market — including Jeddah, Al Khobar, Kuwait, Manama, Muscat, Salalah and other important cities — totalled 199 hotels in 2007, rising to a peak of 325 in 2009. One key difference in this year’s survey methodology was that for the first time this year we included branded hotel apartments.

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HOTELIER MIDDLE EA ST | September 2013 | Volume 12 Issue 09 57

Perhaps most impressive will be the second Fairmont hotel in the UAE capital,

a grand Arabic-style edifice destined to become a major landmark on the Breakwater near the Marina Mall, with 812 keys”

lands, as well as the smaller, exclusive Nurai and Nareel islands. Main-land districts include Al Raha Beach, the ‘green’ Masdar City, Ghan-toot Green City and the Capital District, a long-term project to create a major new CBD in Khalifa City.

DUBAI CASHES IN ON CONDO APARTMENTSAs the region’s main focus for pipeline activity, Dubai is also the cruci-ble of innovation in terms of lodging product, with condo apartments — serviced (hotel) apartments that are individually available for sale freehold to all comers — rapidly emerging as an exciting new focus. Da-mac, known throughout the region for its freehold residential towers, has entered the transient lodging sector with four new condo apart-ment projects next to the Burj Khalifa. One of these, the 1940-unit Damac Towers by Paramount will feature management by Paramount Hotels & Resorts, a new chain established under licence in Dubai. Expect many more Damac condo units in Dubai and beyond. The Ad-dress Hotels + Resorts, pioneers of the concept in the region, is also launching four condo apartment towers next to the Burj, in addition to the launch of new boutique brand, Vida.

The future Viceroy Hotel on The Palm is also selling its rooms con-do-style. Other brands planned for conventional resorts on The Palm include Hilton, Kempinski, Sofitel (now open), W and Waldorf Asto-ria. Facing the Palm, the Pearl of Dubai project continues on its gradual path to fruition, promising new-to-market brands Baccarat, Belaggio, MGM and Skylofts. Elsewhere in the city will be a beach resort by Four Seasons on Jumeirah Beach Road and urban properties by Conrad, Rosewood and St. Regis, plus a third Sofitel and another W. The Palaz-zo Versace is 80% complete on Dubai Creek, while the second, 804-room tower of the JW Marriott Marquis opens by 2015.

Startling announcements by the Dubai government over the last few months have raised hopes of major new hotel districts emerging in the

InterContinental Dubai Marina is expected to open by the end of 2013.


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medium term, such as Mohammed bin Rashid City, in which 100 new hotels and the world’s largest mall are envisaged. Even projects thought to have received the coup de gras at the onset of recession have now expe-rienced major revival, from Business Bay to Jumeirah Lake Towers and from Dubailand to Jebel Ali.

DOHA TURNS ON THE STYLE Boasting a chain hotel pipeline of 8903 keys in 33 fu-ture properties, the Qatari capital is stealing the march even on Dubai in terms of trendy new-to-the-region brands. These include perhaps most excitingly, the Mondrian Doha, a brand of Morgans Hotels Group, the

Startling announcements by the Dubai government over the

last few months have raised hopes of major new hotel districts emerging in the medium term, such as Mohammed bin Rashid City, in which 100 new hotels are envisaged”

City performance compari-son Q1 2013 (occupancy %)

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Abu D

habi

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ah Jafza Convention Centre in Dubai will house an office complex, a hotel and a food court.

New York-based lifestyle hotel specialists originally founded by boutique hotel pio-neer Ian Schrager, in the 1980s. The uber-hip property will be in the West Bay lagoon area, where future neighbours will include a Waldorf Astoria, a Pullman and yet a third

property from the Grand Heritage chain. A little further north, local owner-operator Katara is planning the 614-key Lusail Ma-rina Iconic Towers, which, if the artist’s impression is accurate, are more than aptly named. Qatari Diar’s Lusail district is even-tually expected to house 22 hotels.

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Super-exclusive Mandarin Oriental will debut its first Gulf property in the styl-ish Musheirib urban regeneration project near the Corniche, as will Accor’s M Gal-lery lifestyle brand. The same area will also feature a new Park Hyatt and an elegant Shaza hotel featuring contemporary Ara-bian architecture.

The second Missoni in the region will open on Doha’s C Ring Road, while the Capella chain, established by former Ritz-Carlton renegades, will manage a hotel at Education City under the Solis brand.

Boasting a chain hotel pipeline of 8903 keys

in 33 future properties, the Qatari capital is stealing the march even on Dubai in terms of trendy new-to-the-region brands”

Plans for Mohammed Bin Rashid City, Dubai. Radisson Blu Hotel, Riyadh Ring Road will open in Q1 2015.

Anantara, meanwhile, will manage a well-ness-themed resort located on a private island off the coast.

Qatar promised FIFA it would add 80,000 keys to its transient lodging in-ventory before the 2022 World Cup, so there are no holds barred on development. Barwa’s US$5.5 billion Oryx Island project

— one of many planned by the mega developer — will answer this call by including jetties for five floating ho-tels to house 25,000 soccer fans. But the football tour-nament is far from the only impetus to building hotels as Qatar’s gas-fired economy continues to underpin major urban expansion, with real estate projects from Doha Festival City to Wa’ab City all containing impor-tant hospitality components.


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MAKKAH, A MEGA HOTEL METROPOLIS IN SAUDI ARABIAWith 3.1 million Hajj visitors in 2012 and a leap to 17 million projected by 2025, Mak-kah continues to increase in importance as one of the world’s top religious tour-ism destinations. In response to this rapid growth, the Jabal Omar development, lo-cated on 2.2km2 of prime land overlooking the Holy Mosque, will create no less than 38 hotels containing 13,500 rooms and 34,000 beds, with a peak season capacity for 100,000 pilgrims.

According to the Jabal Omar Develop-ment Co, some 28 operators have been signed up to manage the hotels, with four top global chains already having reported almost 8000 keys between them: Hilton (3862), Hyatt (1028), Marriott (1611) and Starwood (1,496). This represents half the entire future pipeline in Makkah.

Hilton will open six hotels in the Jabal Omar development; four Hiltons, a Con-rad and a Doubletree. Hyatt is planning a Hyatt Regency, a Hyatt Place (residential style units) and a mid-market Hyatt House (this brand was formerly known as Sum-merfield Suites). Marriott is deploying its complementary JW Marriott, core brand Marriott and Courtyard by Marriott arse-nal, while Starwood’s equivalent move is to

According to the Jabal Omar Development Co, some 28 operators have been signed up to manage the hotels, with four top global

chains already having reported almost 8000 keys between them”

Doha

Dubai

Riyadh

Abu Dhabi

Makkah

CITY 2014

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20172013

2016

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Room distribution

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STAR RATING

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There are 189 chain properties with 64,063 keys opening in the five cities by 2017, with the keys distributed as follows:

Lusail Marina Iconic Development in Qatar.

Sofitel Riyadh is due to open in 2015.

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Chain ranking by pipeline keys in the five cities combined

31%

14%

17%

13% 23%

23%

6% 7%

21%

25%70%

25%

25%

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Hilton Worldwide is developing no less than

seven new hotels with 1450 keys in Riyadh comprising two core-brand Hiltons, three Doubletrees and two Hilton Garden Inns”

propose a Westin, a Sheraton and a Four Points. Mil-lennium has no confirmed Jabal Omar hotels yet, but has announced the no less impressive, 1400-key Umm Al Qurah Hotel and the Copthorne Hotel Nobola Mak-kah (756 units). Best Western is also opening two new properties in Makkah, including the 1200-key Best Western Bougary Hotel.

There are several other major hospitality developments in town, not least the Abdul Latif Jameel Real Estate Co’s Jabal Al Kaaba project, where a 1743-key hotel will be the first of 8500 keys planned by the developer under its own new Anjum brand. The 1.5km2 King Abdul Aziz Endowment (Dokaee) project will also feature hotels and hotel apartments.

RIYADH – MOVING FROM UNDER- TO OVER-SUPPLY?With a population of more than five mil-lion, Riyadh is easily the Gulf’s largest me-tropolis. Yet it has historically languished behind other cities in the region in devel-oping a broad base of international and re-gional chain hotels. This is about to change, as 39 chain properties with 8207 keys have been confirmed through our survey. These figures compare to an existing inventory in the Kingdom’s entire Central Province, in-cluding Riyadh and other towns, of 60 ho-tels with 9105 rooms and 276 mostly infor-mal ‘furnished apartments’ with 7226 keys, as per the Saudi Commission for Tourism and Antiquities.

Riyadh’s key project currently is the King Abdullah Financial District (KAFD), which will eventually offer 80 towers and three million m2 of floor space for financial companies, a few minutes drive north of the central Olaya district on King Fahd Road. Part and parcel of the elegantly designed project are its hotels, which will include the city’s second InterContinental and the

region’s first Hotel Indigo (Intercon’s bou-tique brand), as well as a Grand Wyndham, a Doubletree and a Hilton Garden Inn.

Hilton Worldwide is developing no less than seven new hotels with 1450 keys in the city, comprising two core-brand Hil-tons, three Doubletrees and two Hilton Garden Inns.

InterContinental’s four projects in Ri-yadh additionally include a Crowne Plaza at the ITCC (Information Technology Communications Complex, a ‘smart city’ project similar in approach to Dubai’s In-ternet City) and a Holiday Inn. Rezidor’s Riyadh pipeline comprises two Radisson Blus and a Park Inn.

A number of other operators are plan-ning more than one property, including Ac-cor (Sofitel and Suite Novotel), Best West-ern, Cristal, Hyatt (Hyatt Regency and Park Hyatt), Marriott (two Courtyards), MENA, Millennium and Rotana (Centro and Rayhaan). Other mega projects such as Prince Alwaleed’s 16 square kilometre Riyadh Land promise many more hotel de-velopment opportunities.

hotelier middle east sept 2013 gcc hotel pipeline survey

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