Eye for opportunity
While operations teams will be focused on offering value, development managers and investors would be wise to take advantage of value in the market themselves during 2010.
“We know that worldwide there are many hotels and brands struggling to stay afloat and in 2010, if indeed the business climate remains as it was for 2009, the challenge of debt payment will become much more significant. I think it fair to say we could well see some significant ownership changes of both individual properties and possibly even brands,” says Barnes.
Hytönen and Landais also observe opportunities for conversions.
“We do not see banks coming back for providing debts on new developments in 2010 as they will be busy in re-structuring primarily ongoing commitments. We expect subsequently equity driven developments and especially distressed funds to be active in taking over existing projects, possibly even existing properties falling short of cash,” explains Landais.
“From the operators’ perspective, we believe that this overall situation will trigger a market oriented towards conversion of unbranded/ill-branded projects and properties into international brands managed by operators with strong covenants. There should be foreseeable conditions required by equity funds and also by creditors in case of debt restructuring,” he says.
For Accor, this opens opportunities for the Mercure brand in the four-star segment and Pullman Hotels & Resorts in the five-star sector, in addition to continued growth in the economy market that Accor has focused on so far in the region.
“Now that all [segments] are hit by the slowdown, everyone expects a better resilience of the economy business model, and investors therefore remain adamant in developing such products and will therefore complete their projects. We see a great opportunity for network expansion and gaining considerable market share in the region with the plan to open six hotels between economy and midscale segments in 2010,” says Landais.
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Upbeat attitude
Landais’ positive outlook is shared by those based in the market that has received the most negative attention in recent weeks, Dubai.
Jumeirah Group’s future inevitably came under discussion at the end of the last year in the wake of numerous stories associated with Dubai’s debt repayments. However, in an interview with Forbes magazine, chairman Gerald Lawless refuted claims that its parent company Dubai Holding will sell off the luxury hotel operator to pay off debts maturing next year. “Jumeirah and Dubai Holding are part of each other and Jumeirah is not going anywhere,” Lawless told the magazine. “Dubai Holding will be fine.”
Jumeirah Group regional director of sales Craig Senior says the company is well advanced with bookings and new openings for 2010.
“At Jumeirah we continue to enjoy a robust trading performance with current occupancy rates of more than 95% in many of our hotels, high levels of bookings for the coming year and a healthy balance sheet. We believe strongly in the future of Dubai and the UAE as a travel destination and we therefore remain positive about prospects for the future,” says Senior.
In terms of specific areas of growth, Senior anticipates more inbound travel from China as a result of the UAE government receiving Approved Destination Status from the Chinese government, as well as growth in the GCC, Middle East and Indian Subcontinent feeder markets as travellers opt for shorter vacations. In terms of operational trends, Senior says: “We anticipate the groups segment will show a greater positive return in 2010 compared to 2009 booking and enquiry trends.
“Average rates will remain under pressure; the challenge for the travel industry in general will be to grow rates at certain periods of the year.”
Regarding expansion, Senior says projects are underway in the UAE, Jordan, Qatar, Oman, Bahrain, Kuwait, Maldives, Bali, Thailand, China, Argentina, Spain, England, Scotland, Germany, the US Virgin Islands and Morocco. “During the course of 2010, we look forward to the opening of Jumeirah HanTang Xintiandi in Shanghai, Jumeirah Frankfurt in Frankfurt, Jumeirah Messilah Beach Hotel in Kuwait and Jumeirah Al Fattan in Dubai,” asserts Senior, adding that he expects the group to make further announcements during the course of this year.
As mentioned previously, Accor also has significant plans for 2010.
“Early in 2010, we will open our second hotel in Kuwait, ibis Sharq with 160 rooms. This follows the opening of our first Kuwaiti property — Ibis Salmiya,” says Landais. “We also plan to open ibis Rigga – Dubai, with 280 rooms, within the first quarter of 2010 and our new brand ‘Pullman’ strategically linked to the Mall of Emirates, Dubai with 481 rooms by mid-2010.
“In Bahrain, the luxurious Sofitel Bahrain Zallaq Beach with 263 rooms will welcome its first guests by mid-2010, together with ibis Seef which will have 304 rooms.
“In Saudi Arabia, our projects are also on schedule with three to four hotels scheduled to open in 2010,” adds Landais.
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