AHIC: a platform to discuss change

Bench Events chairman Jonathan Worsley says that sessions at May’s Arabian Hotel Investment Conference in Dubai will be guided by recent political changes, with the property pipeline and development strategies coming under scrutiny.

I have just come back from Berlin where we held our annual International Hotel Investment Forum (IHIF) with 1700 attendees from all over the world.

The happy news is that investor sentiment is up and transactions are happening. As one global CEO told me: “The last three years were easy, we just said no! It is the investment decisions we make in the next three years that will really determine whether we are good at our jobs.”

We have seen a great deal of attention return to markets such as Dubai as transaction values in Europe increase and investors are no longer hunting for the mythical “distressed asset.” Investors previously put off by inflated prices are now reconsidering and keen to take a second look.

In Berlin, one of the questions I was constantly asked was “what is going on in the Middle East?” This was a question that was addressed by our keynote speaker, economist Douglas McWilliams, who had the view that a better question is “what will happen in Saudi Arabia?”.

His feeling was that if all remains stable in the Kingdom, then investment in the region should continue at a steady pace. If not, well we are looking at oil going over US $200 a barrel and then we all have a new set of challenges we need to overcome.

According to a recent report, Steve MacDonald, Analyst for Investment U, said: “Many analysts think that the situation in Egypt could actually have a very positive outcome for Egypt and investors.

The situation will take time to improve and requires a long term outlook. Almost every analyst sees Egypt as being a better investment opportunity after the power transition is complete”.

Indeed, within the hospitality sector we are seeing the Egyptian market begin to bounce back. No stranger to turmoil, this is a market showing real resilience given what it has gone through in the past couple of months. 

Market changes
As we all know, there is much change in the MENA region at present that will form the basis of debate for the Arabian Hotel Investment Conference (AHIC), which runs from April 30-May 2 in Dubai.

In addition to the programme, which will continue as planned, some of the panels will focus on what the political changes really mean for investors, developers and where the opportunities lie. The ‘Emerging Markets’ session at AHIC for example will naturally proceed as a different discussion to what was originally going to take place.   

In addition, it should be remembered that hotel investment in the MENA region is also fuelled by commerce, in particular the oil and gas industries as well as tourism. As long as these markets continue to show strong levels of activity, then we should expect to see continued, strong demand in the future.

It is early days but there is a marked sense of optimism. Change nearly always brings a range of opportunities. I speak with a number of hotel investors on a regular basis and the general consensus is that markets will open up, making it easier to go into areas that have previously been more challenging business environments.   

We suspect that in the short-term many projects in the areas directly affected by the current unrest areas will be put on hold until the situation becomes clearer.

This does mean that we should also expect an increase in interest in the unaffected areas that are geographically close, as they have demonstrated a greater degree of stability. Whether this continues to be the case remains to be seen.

I think that the ‘AHIC Pipeline Update’ will be more crucial than ever this year and hopefully by May we will have greater clarity on which projects have been put on hold or affected. Also, it will be very interesting to see how development strategies for the region have been refocused.

In the light of the changes in the Middle East, I think that AHIC is particularly well timed to provide a platform for the industry to learn from each other what the recent reshaping means for hotel investors. 

As I previously said, I really do think that the general feeling is one of cautious optimism for many of the regions and a wait and see for others, but the fact remains — hand in hand with any change almost always comes opportunity.