The Kingdom of Sheba hotel being developed by IFA Hotels & Resorts has been “put on hold”, IFA Hotel Investments president Joe Sita told Hotelier Middle East.
“The Kingdom of Sheba project has a hotel designed or planned into it in the master plan and there will be a hotel there eventually, but it really will depend on the market conditions as to when we reinstate the development of the hotel project there,” said Sita.
He added that the hotel was “not a Fairmont property”, as announced several years ago, but said that because Fairmont is a strategic partner of IFA Hotel Investments — which asset manages the properties developed by IFA Hotels & Resorts — it could potentially operate it in the future.
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“We had signed a letter of intent,” explained Sita. “We had always signed this agreement [for the Fairmont Palm Jumeirah Hotel and Resort, opening in 2012] and then we had at that time thought it made sense because of the relationship we have with Fairmont and because of the way that project was structured that we would do that [for Kingdom of Sheba]. That’s not to say we won’t do it with them in the future, it’s just the whole project is put on hold at the moment.”
Luxury hotel operator Kempinski also has two projects on the Palm and recently announced that the opening of the Emerald Palace Kempinski Palm Jumeirah Dubai was pushed back to 2013.
The first phase of the project, Kempinski Hotel and Residences Palm Jumeirah, is on schedule to open in July this year.
The company’s president for the Middle East and Africa, Ulrich Eckhardt, told Bloomberg: “I’m concerned about what I consider poor planning from those in a position to approve new hotels”.
Building permission was granted without studying “existing inventory, growth rates and future demand,” he said.
“As we open these hotels, we have to create a customer base,” Eckhardt added. “We knew it was impossible to create that with all these other hotels opening at the same time. You would be diverting business, not creating it.”
Sita said that visitor arrivals into Dubai were actually “very encouraging”, but said that although growth had come back, “we are on a different trajectory today”, hence putting Kingdom of Sheba on hold.
“Regarding Uli Eckhardt’s comments, it’s for him and his owner to determine when is the right time in terms of the market, but I can certainly understand the situation and I think it’s a combination of two things that is causing the delay. One is the trajectory of growth is not as anticipated and two, the capital markets are not yet to the stage where they were when the projects were conceived,” commented Sita.
He reported that IFA Hotel Investments was “very fortunate” to secure US $115 million for its Fairmont Palm Jumeirah hotel project structured and arranged by Standard Chartered Bank.
“I’m hoping that that will stimulate more of that financing in this region going forward,” said Sita.
The agreement will allow IFA Hotels & Resorts to expedite the project’s completion to Q1, 2012.
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