Stephen Lari, principal of the Claremont Group, a New York developer, claimed that his company’s planned DoubleTree Suites project in Erbil could achieve an impressive IRR of 25 to 30%.
Bashar Al Natoor, director, Corporates from Fitch Ratings distinguished between “committed and non-committed projects” in the region, and those of the public and private sectors. Referring in particular to Abu Dhabi, where it was hoped government spending on tourism projects would soon resume strongly, he said that only governments had the wherewithal to put projects on hold and restart them in this way, whereas private developers could not.
Pinpointing opportunities
In a most pertinent panel session facilitated by Jones Lang LaSalle’s CEO, Mark Wynne-Smith, bankers were shown five realistic case studies of hotels in the region and asked to respond live if they would lend them money or not. While they turned down a new resort in Hurghada due to poor demand and a five-star downtown hotel in Riyadh due to expected oversupply, they loved the prospect of a branded budget hotel in downtown Abu Dhabi.
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Indeed, budget hotels in KSA were one of the few specific sub-sectors that were agreed to offer real investment potential, as Oliver Granet, with more of his macro data, told the audience: “There are 25 million inhabitants in the Kingdom, but not one international branded budget hotel”.
With low development and operational costs, and high demand and profit potential, the Ibis, Premier Inn, Super 8 and Mena brands are all planning new properties there.
Elsewhere in the conference, Oman was depicted as offering quiet potential, Qatar struggling with oversupply, Kuwait stagnant and Bahrain still bogged down with security problems.
Even in booming Dubai, most development projects are still ones that were started pre-recession, with only Al Habtoor’s 1,700-room Westin/W/St. Regis complex standing out as a contemporary vote of confidence in the city’s future as a global convention destination.
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Jun 12, 2012 , Spain
As you state, committed projects are few and far between - and even then, getting all of the relevant information about any project can be difficult at the best of times. The other thing to consider with the region in general is the actual real demand for hotel rooms in general - whilst the numb...