Europe and the Middle East
So the question is: how will the Euro crisis affect Middle East markets?
After we saw the bubble burst in 2008-2009 my brain trust indicated that there is less dependence on the European markets than in the past and plans for growth appear to be more stable and sustainable.
As Rezidor’s Chhatwal identified: “Due to economic and cultural links with India and parts of Africa, the Middle East has the advantage of being able to hedge its risks”.
Frank Croston, partner of Hamilton Hotel Partners, pointed out: “The effect of the European market conditions will put pressure on price, particularly those travelling to the Middle East from Europe”.
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Given the right conditions, the post-Arab spring could provide a wealth of hotel investment opportunity, which is an appealing prospect in the face of a European slowdown. This feedback was also reflected in the recent meeting of the Arabian Hotel Investment Conference advisory board. The long-term regional sentiment is far from pessimistic.
Moving to Africa, Steve Box of HSBC said recently in The Times: “Africa has been fairly insulated from the financial crisis because of its lack of integration into the global financial system and trade not aid is becoming a reality, not least because of China’s strong role on the continent”.
Marriott has certainly drawn a line in the sand on its plans for growth in the continent by hiring industry guru Alex Kyriakidis from Deloitte as its new chief executive officer Middle East and Africa.
Time for a bargain
Considering the European crisis, conditions are ripe for the famously liquid Middle East investor to start snapping up bargains as rival European buyers struggle to find debt.
Croston suggests that Middle East investors may find a route to market through debt provision and Russell Kett, managing director of HVS, said: “Middle Eastern investors will continue to seek out acquisition opportunities, taking advantage of their strong cash position”.
Derek Gammage, managing director of CBRE Hotels, added: “Once in a generation trophy assets will continue to appeal to Middle East investors and sovereign wealth funds”.
So to sum up, Europe in 2012 will struggle like never before. Those with cash sit in a unique position and companies will continue to reduce their exposure to countries affected by the financial crisis by diversifying into the high-growth markets of the world.
The Arabian Hotel Investment Conference will run from April 30 to May 1 at Madinat Jumeirah in Dubai: www.arabianconference.com
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