Iraq and Libya ripe for hotel investment

Real estate and hotel development experts have identified Iraq, Libya, Algeria and Iran as emerging markets for hospitality development investment.

The topic was debated at last month’s Arabian Hotel Investment Conference (AHIC) advisory board meeting, which brought 40 of the event’s key stakeholders together at The Emirates Academy of Hospitality Management in Dubai to suggest issues that the 2010 investment conference should cover.

During a panel session on predictions for 2010 prior to the closed-door meeting, MEED content director Sean Brierley said: “The two main countries that will be emerging will be Iraq, largely because although obviously the security issues there are still ongoing and the Amercian withdrawal next year is going to be quite dramatic and possibly traumatic for the country, they are coming quite a way now towards opening the environment to investment and there is a lot more interest now in the Iraqi economy.

“The other country I think probably will be Libya,” continued Brierley.

“Very often these things are predicated on a change in political climate and there has been a lot of change in the political climate with regards to Libya and obviously in terms of the oil revenues, there’s a lot more focus now towards developing the service sector in Libya,” he said.

However, when questioned on his views about the impact of the political situation in Iraq on the hospitality industry, Brierley added: “I think I should qualify; I don’t think there is going to be an upturn in tourism in Iraq. I don’t think there is going to be package tourists hitting the beaches, but I do think there’s going to be a considerable amount of investment going forward because there are a number of changes and certainly the regulatory environment is changing, the political environment is changing, although there are flash points, still it has largely stabilised.

“Generally speaking, when you look relative to other economies in the Middle East, Iraq is one of the more fertile going forward for longer term investment and I think that certainly will start next year,” concluded Brierley.

Howarth HTL managing partner Philippe Doizelet agreed that Iraq and Libya had potential for hotel investment and said a similar argument applied to Algeria and Iran.

“If you take those countries, what do they have in common; they are still security or political concerns, but they have a huge demand for business because they generate a lot of money from oil and they are re-injecting this money into infrastructure, so in that respect business people are ready to pay premium for good hotel with reasonable level of security and comfort,” said Doizelet.

Doizelet said that ADR was performing well in Algiers, with rates double or triple those in Tunis, for example, because of a “strong demand and a very tiny supply”.

“It’s not because you are not a tourist haven that you are not a suitable market for hotels,” he added.

Also last month, In the run-up to a major investment conference in Washington, traders at Iraq's stock exchange told foreign investors to concentrate on banks and hotels, according to a report by AFP.

Investment firm Al-Jawhara senior broker Ali Jamal said “the door is being opened for investment in tourism”.

“New hotels are being built and existing ones are being refurbished,” he told the AFP.

"Hotels and banks will do well - once the security situation gets better, their value will rise at an extraordinary rate," predicted Salman Hassan Salman al-Khafaji, who said he had made a profit of 50 million Iraqi dinars (US $43,000) on the markets so far this year.

"Foreigners should invest in tourism -- it will definitely get better here."

For a detailed update on the hotel market in Iraq, see the November issue of Hotelier Middle East