IHG to double Middle East hotels on budget boom

UK hotel chain InterContinental Hotels Group (IHG) plans to double the number of hotels it operates in the Middle East in the next 10 years, the company said.

“We’re the largest hotel company in this patch and we’d like to remain that way. We would expect that we would double our presence here over the next seven to ten years,” Kirk Kinsell, president for Europe, Middle East & Africa, told Arabian Business.

The company, whose brands include Crowne Plaza and Holiday Inn Express, operates 74 properties across the region and counts Saudi Arabia as its largest market.

Its expansion plan hopes to capitalise on rising demand for high-quality budget hotels across the Middle East region, said Kinsell.

“What we are seeing emerge across Dubai and the Middle East is a mass market. Not everybody is comfortable staying in a luxury resort, walking through a lobby and being dressed to the nines.

“You have a more fluid middle class and people in that category want to travel as well. I think there is a bright future in this part of the world for a mass market product,” he said.

The rapid growth of mid-range hotels in the region is set to mirror Europe’s budget hotel growth two decades years ago, consultancy firm Jones Lang LaSalle said Sunday. Low-cost properties are set to open in industrial centres and smaller cities as demand from cost-conscious business travellers increase.

For hoteliers, budget-priced properties offer a better return on investment, Kinsell said.

“To build a five-star property is very expensive. To build a Holiday Inn or a Holiday Inn Express is a lot less so,” he said. “The risk on return on investment over time is much less and you can do more of them, so you can spread your risk, as opposed to a single asset property.”

IHG this year rolled out a $1bn revamp of its Holiday Inn and Holiday Inn Express brands and said its Crown Plaza brand would also be overhauled.

Royal Bank of Scotland warned in a research note the brand revamp could see up to a tenth of Crown Plaza properties dropped from IHG’s portfolio, but Kinsell said the overhaul would be unlikely to affect the 18 hotels in the Middle East.

“The challenge for Crowne Plaza is more of a US challenge than it is a global challenge. It certainly isn’t for the Middle East or Asia or China,” Kinsell said.

IHG reported a 5.9 percent rise in revenues in 2010.