Hotelier ME July 2014 chain hotel pipeline survey article


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Article about Viability's annual (June 2014) survey of the future hotels in the GCC (Arabian Gulf) region, as declared to us by 134 chains. Includes rankings by chain and city/town, as well as individual chain rankings for Dubai, Abu Dhabi, Riyadh, Jeddah, Makkah, Doha, Muscat

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Hotelier ME July 2014 chain hotel pipeline survey article

  1. 1. HOTELIER MIDDLE EAST | July 2014 | Volume 13 Issue 07 SPECIAL REPORT 44 Viability Management Consultants’ latest survey of the future plans of hotel chains in the GCC has revealed the largest pipeline ever registered in the 14-year history of the research. Hotelier Middle East unveils the key findings The Lusail Iconic Towers in Qatar. Capella’sSolisbrandisplannedforDoha. Hilton Worldwide tops the all-important rooms- based ranking with 9,593 keys (30 hotels), which compares favourably with the record pipeline of 10,472 rooms set by Marriott back in 2009” tion, which revealed its distribution among no less than 34 cities and towns across the GCC. With 28,419 keys, Dubai has more than twice the pipeline of its nearest rival, Mak- kah (13,724), which was followed in the top 10 by Doha (10,777), Abu By comparison, the previous record numbers were registered in 2009, with 325 pipeline hotels contain- ing 92,016 keys. 2014 was the first year in which we conducted a full GCC survey that included all kinds of transient accommodation letting units, i.e., hotel rooms, suites, apartments and villas, whereas histori- cally we had excluded the latter two unit types. We felt it more logical to include them this time, as they have become ‘mainstream’ for most operators. As per the chains’ current expectations, almost 80,000 or 80% of the pipeline should materialise be- tween 2014 and 2016, with the remainder opening by 2019. Major deadlines like those of Expo 2020 in Dubai and the 2022 World Cup in Qatar should help ensure that construction programmes do not slip as much as usual. Some 61% of the pipeline keys will be rated five-star, 30% four-star, just 9% three-star (mainly compris- ing the 10 Premier Inns in the pipeline), and just one two-star property, the Swiss-Belinn Ghubrah Muscat. However, both Wyndham Hotel Group and Emaar Hospitality Group have significant budget hotel pipe- DEMANDDRIVESBRANDINVASION B y G u y Wi l k i n s o n VIABILITY SURVEY lines, but these were excluded as per the rules of our survey because they could provide no details on an indi- vidual property basis. Wyndham is opening nine Days Inn hotels with a total of 800 keys, as well as 19 Super 8 hotels totalling 900 rooms, all in Saudi Arabia with investment part- ners there. Both brands are new to this region. Emaar is partnering with another Dubai government devel- opment company, Meraas, to open a reported five budget hotels in the city under a new brand called Dubai Inn. Union Properties, another lead- ing Dubai developer, has also prom- ised to build 1000 ‘affordable’ hotel rooms in the next five years. It is worth noting that there continues to be major investment in budget hotels across the GCC, but mostly by own- er-operators with no chain affiliation. DEVELOPMENT SPREADS INTO TERTIARY LOCATIONS Again for the first time in the sur- vey’s history, we provided a detailed breakdown of the pipeline by loca- A ltogether, Viability Management Consultants canvassed 134 hotel chains, large and small, international and local, that are active in this region for the 2014 edition of the GCC Chain Hotel Pipeline Survey. This was a record num- ber, representing a 15% increase over last year. Of these, 72 companies — or 54% of the total — confirmed new hotel projects coming up under their management. Between them, these operators will be opening 391 hotels and hotel apartment buildings with 101,123 keys across the six GCC states between now and 2019. This is the first time ever that the pipeline has broken the 100,000 unit barrier. EXCLUSIVE RESEARCH
  2. 2. SPECIAL REPORT HOTELIER MIDDLE EAST | July 2014 | Volume 13 Issue 07 45 Spanish resort operator Blue Bay, for example, which has 27 ho- tels under six brands in Spain and the Caribbean, will be opening two proper- ties in Dubai, with further expansion expected soon in other UAE emirates.” Dhabi (9,058), Riyadh (8,954), Jeddah (7,969), Mus- cat (4,587), Manama (3,078), Al Khobar/Dhahran/ Dammam (1,729) and impressively, Ras Al Khaimah (1,698). Notable further down the location rankings were many other provincial towns across the Gulf re- gion, including Ajman and Khorfakkan in the UAE; Al Ahsa, Baha, Hail, Jizan, Jubail, Tabouk, Unaiza, Yanbu and Qurayyat in Saudi Arabia; and Duqm, Jebal Akh- dar and Sohar in Oman. This reflects not only the rapid economic or tourism development of such locations, but also the maturing of the large chains to the extent that they have established their key brands in primary locations and are now seeking to develop their net- works into secondary and tertiary communities. MASSIVE CHAIN DEVELOPMENT 2014 has seen 22 chains each declaring more than 1000 rooms under development, a figure just shy of the peak of 23 achieved in 2009. The average number of keys per property under development by each of the 71 chains that declared pipeline activity was an impres- sive figure of 259. Hilton Worldwide tops the all-important rooms- based ranking with 9,593 keys (30 hotels), which com- pares favourably with the all-time record pipeline of 10,472 rooms set by Marriott back in 2009. Starwood is in second place with 7,912 keys. The other management companies in the top 10 comprise — in order — Marri- ott, Accor (with the largest number of hotels at 31 prop- erties), Rotana, InterContinental Hotels Group, Millen- The Jeddah Marriott Hotel was announced in May this year. Meraas Holding will develop the first luxury Bulgari Hotel in Dubai. nium & Copthorne, Wyndham, Hyatt and Golden Tulip. At 11th place with 3,070 keys, Rezidor is ranked ninth in the hotel ranking with 17 properties under development. Within the top 20, it is impressive to see local companies Anjum, with one single upcoming hotel in Mak- kah boasting 1743 keys, Time Hotels from Dubai and Bin Majid from Ras Al Khaimah, the former now expand- ing beyond the UAE into Doha and Riyadh, for example, and the latter spreading from its provincial base into Abu Dhabi and Dubai. Among the 134 hotel management companies to whom we requested information this year were a number of interesting new names. Spanish resort operator Blue Bay, for exam- ple, which has 27 hotels under six brands in Spain and the Caribbean, will be opening two properties in Dubai, with further expansion ex- pected soon in other UAE emirates. Thai hotel company Centara Hotels & Resorts, which boasts 45 Thai properties and almost 20 elsewhere in the Far East, in Ethiopia, Mauri- tius, the Maldives and Sri Lanka, will make its Gulf debut with two hotels in Doha. The formerly one-off Emir- ates Grand Hotel in Dubai has now become a brand that will be featured on a hotel apartments property in Dubai and a hotel in Sharjah. In Doha, The Souq Waqif Bou- tique Hotels have grown into a group of six jewel-like properties in the eponymous, most attractively re- stored historic district. In the pro- cess, they have become a benchmark 14th continual year of survey All chains active in the GCC are canvassed directly All letting units included (rooms, suites, apartments & villas) Excluded: All rumoured projects All unsigned projects All projects with unconfirmed room counts All projects on hold or with uncon- firmed opening dates All single owner-operated properties Ranking Methodology for orientally-styled boutique hotels. A seventh property, Soy, will open with just 19 rooms later this year. Back in Dubai, Teal Hospital- ity, run by former Rotana veteran Daniel Hajjar, will open a second hotel under its Cosmopolitan brand, the Grand Cosmopolitan, in 2016. Named after a famous New York hotel, Warwick International Hotels now has a global network of 57 prop- erties including one recently opened on Dubai’s Sheikh Zayed Road. A Doha hotel is due to open in phases over the next few years. MORE BRANDS THAN EVER Viability’s research showed that there were 140 different brands (as distinct from the 72 chains) in this year’s pipeline, of which 44 were completely new to the region. In a fast-growing, highly competitive ho- tel market like that of the GCC, it is
  3. 3. HOTELIER MIDDLE EAST | July 2014 | Volume 13 Issue 07 SPECIAL REPORT 46 natural that there should be an increase in the number and variety of available brands. Hotel investors want new names that help their properties stand out from the crowd, while operators need to add brands so that they can offer fresh options to compete in increasingly saturated — and product-dif- ferentiated — destinations. Local firms are jostling with the inter- national chains for business. For example, most people think of the Gulf Hotel as a one-off five-star hotel in Bahrain. In fact, the company also manages the K Hotel in Manama and the Ocean Paradise Resort in Zanzibar. By 2017, it will be running two further ‘Gulf Hotel’-branded hotels, one in Bahrain’s Amwaj Islands and the other in Dubai’s Business Bay. Over the past few months, Dubai-based Gloria took over Mourouj Hotels & Resorts from Abu Dhabi, and hence a new hybrid brand was born, Mourouj Gloria, soon to be seen at Specialist apartment- only operators Frasers and The Ascott, both from Singapore, are introducing more of their brands, including Fraser Place, Fraser Residence and Ascott’s mid- scale Citadines, a popular European aparthotel concept” Hotelchainrankingbypipeline:numberofrooms 0 5000 10000 15000 20000 25000 Hilton IHG Rezidor Viceroy Starwood Millennium FRHI Time Marriott Wyndham TheAddress Kempinski Rotana GoldenTulip Anjum FourSeasons Others Accor Hyatt PremierInn BinMajid an unusual hunting lodge project near Al Ain. Emaar in Dubai, fresh from the suc- cess of launching its Vida lifestyle brand near the Dubai Mall, is now about to turn the formerly independent Al Manzil Ho- tel into an Arabesque brand called simply Manzil. Meanwhile, Abu Dhabi’s Rotana will formally introduce its new branded residence insignia, The Residences, at a project in Doha. Hotel or serviced apartments are an in- creasingly attractive option for many ho- tel operators. Specialist apartment-only operators Frasers and The Ascott, both from Singapore, are introducing more of their brands, including Fraser Place, Fraser Residence and Ascott’s mid-scale Citadines, a popular European aparthotel concept. In Dubai, the trend to offer ‘condo apartments’ or hotel apartments that are individually for sale freehold has become a genuine phenomenon. Following the lead of The Address and other early pio- neers, the major Dubai developer Damac has embraced the concept wholeheartedly, having established its own Damac Maison management company/brand for the pur- pose of offering serviced apartments to its buyers. A senior Damac executive recently made a public statement to the effect that it had some 9,000 such condo apartments under development, with a major concen- tration in Dubai’s Downtown and Business Bay districts. Had the company elected to Emaar Hospitality is developing the first Dubai Inn hotel. A rendering of the Paramount Hotel Dubai.
  4. 4. HOTELIER MIDDLE EAST | July 2014 | Volume 13 Issue 07 SPECIAL REPORT 48 SaudiArabia:36,880 Bahrain:3,251 Qatar:10,777 UAE:43,232 2015:29,353 2018:5,280 2014:24.418 2017:12,570 YEAR 5-Star:62,074 3-Star:8,631 4-Star:30,231 Breakingdownthepipeline Roomdistributionbycity,country,yearandstarrating Nobu Riyadh is hotly anticipated in Saudi Arabia. A room rendering of Nobu Riyadh. 0 5000 10000 15000 20000 25000 30000 Dubai Jeddah Madinah Jizan Makkah Muscat Sharjah Salalah Doha Manama Kuwaitcity Ajman Riyadh RasAIKhaimah AiAin Tabouk Others AbuDhabi AIKhobar Fujairah Sohar 36% 29% 61.4% 11% 24% 3% 3% 0.2% 1% 6% 5% 8.5% 43% 12% 29.9% 26% Kuwait:1,147 Oman:5,836 2016:26,086 2019:3,416 2-Star:187 STAR RATING COUNTRY respond formally to our survey, it would then have been very near the top of our chain ranking – an amazing achievement for a start-up brand. The global chains also had interesting brand developments to announce. Accor will introduce its first Ibis Styles-branded hotel at Dragonmart next year. The sub- brand is a more colourful version of Ibis, suitable for what the chain calls ‘non- standardised’ buildings. Accor has also re- cently opened its first Grand Mercure Ma- jlis hotel, a specifically Arabian concept, in Madinah. Mid-scale operator Best West- ern will soon open two hotels in Saudi Ara- bia under its upscale Best Western Premier brand. Fellow US lodging giant Wyndham is introducing two new mid-scale brands, Tryp and Wyndham Garden, at properties in Dubai and Doha respectively. Mean- while, Dusit and Steigenburger are debut- ing two mid-scale brands, D2 (a location is yet to be announced) and Intercity (in Dubai) respectively. Gratifyingly, boutique and lifestyle ho- tels are definitely ‘hot’ in the GCC pipeline this year. According to the theory, they promise an at least partial revival of the traditional service values of the ‘grand ho- tels’ of the past. Two operators are prom- ising to open contemporary grand hotels: the Oetker Collection, with its Hotel Le Bristol, and Millennium, with its Biltmore Hotel, planned to come up in Abu Dhabi in 2015 and 2017 respectively. In Dubai, a
  5. 5. SPECIAL REPORT HOTELIER MIDDLE EAST | July 2014 | Volume 13 Issue 07 49 Paramount will be a new Dubai landmark. Top10hotelchainsby numberofpipelinehotels 0 5 10 15 20 25 30 35 Accor Starwood Marriott IHG Rezidor Hilton GoldenTulip Rotana Millennium Wyndham new joint venture company established by MGM and Abu Dhabi-based Hakkasan, called MGM Hakkasan Hospitality is plan- ning three lifestyle hotels – MGM Grand, Skylofts and Bellagio – to open by 2018 at the Dubai Pearl project facing Palm Jumei- rah. Next door will be a lifestyle hotel un- der the Baccarat brand of Starwood Capi- tal (which acquired Groupe du Louvre in 2005, owners of crystal maker Baccarat). ThebigchainsarealsoenteringtheGulf’s lifestyle sector. Marriott has confirmed it will debut both its Autograph and Bulgari brands in Dubai, which will also be the ven- ue for Wyndham’s first Dream hotel in the region, with 720 keys within the 101-storey Marina 101 tower, set to become the tallest luxury hotel and serviced apartments build- ing in the world. Another first in the region will be IHG’s upcoming Hotel Indigo in Ri- yadh,whileaHyattAndazhotelisrumoured for Dubai. Rezidor has converted its former Missoni hotel in Kuwait to its new Quorvus brand, following a corporate ‘divorce’ from the Italian fashion house. Spanish operator Meliá has been ap- pointed to manage a 100-room ME by Meliá designer hotel in Omniyat’s iconic 95m high Opus building, designed by leg- endary‘organic’architect,ZahaHadid. M’s are all the rage, with Millennium promising local launches of its trendy Studio M and M Hotel concepts, and Accor opening its lifestyle M Gallery concept in Doha. These are in addition to new lifestyle hotels to be opened soon by Morgans of New York, Nobu (in joint venture with Saudi Arabia’s Dhaliliyah Establishment) and Paramount, a new Dubai-based chain working with the prestigious Hollywood studio brand. ABOUT THE AUTHOR: Guy Wilkinson is a director of Viability, a hospitality and property consulting firm in Dubai. For more information, email: