Arab Spring brings simultaneous boom and bust conditions for luxury hotels in the Middle EastPosted on 07 May 2013 with no comments from readers
Luxury hotels across the Middle East are experiencing a curious mixture of boom and bust conditions depending on the exact location of the hotel with respect to the Arab Spring protests, revolutions and civil wars. In short, the Oil States are mainly booming and the rest are not.
That was the message ArabianMoney picked up this week from the Arabian Hotel Investment Conference and the Arabian Travel Market, the biggest events of the calendar for the region’s hospitality industry. There are some exceptions to this rule.
Abu Dhabi room oversupply
In Abu Dhabi, for example, an oversupply of very similar five-star deluxe rooms has flooded the market despite booming oil revenues. Rocco Forte has pulled out of its recently opened hotel. Brand Manager Richard Power told ArabianMoney that oversupply and a change in plans to the development of the district around the hotel contributed to this decision.
But he hastened to add that it is ‘completely the opposite situation in Jeddah where we have a 209-bedroom hotel set to open in Q3 2014’. Here the Rocco Forte hotel has a ‘prime location in an undersupplied market’ and ‘can’t wait to open.’ The Arab Spring has put a lot of money into the pockets of Saudi Arabians with huge public sector pay rises since these events started over two years ago.
Then again in Egypt the curse of the Arab Spring is working against Rocco Forte. The restoration of the iconic, government-owned Shepheard’s hotel In Cairo has stalled after a complete change of government officials as has a linked project in Luxor to refurbish Thomas Cook’s original hotel there.
Even the Ritz-Carlton is having problems in Cairo with Tahrir Square a great location for both luxury hotels and protestors but the two do not necessarily work well together.
The group is still expecting to open its Tunis property next year which was the birthplace of the Arab Spring just over two years ago. It’s also done much better in Abu Dhabi where its massive new hotel is a hit with the nationals (click here).
Morocco, where the Arab Spring did not take hold is set to roll out Ritz-Carltons in Rabat, Marrakech and near to Tangiers within the next two years. But of course the real boom for luxury hoteliers at present is Dubai and the Northern Emirates.
Occupancy levels of 85-90 per cent plus are common. Dubai is the regional safe haven and alternative tourism destination of choice at the moment, if only because traditional Middle East favorites like Beirut and Damascus carry official safety warnings. Bahrain is also still unstable and Yemen off limits.
Fairmont Palm Jumeirah
Fairmont’s regional Vice-President for Sales and Marketing, Kent Cooper can point to sell-out occupancy at the chain’s stunning new Palm Jumeirah property in Dubai (click here) and to new openings in the UAE are coming up shortly in Ajman, Fujairah and a second hotel in Abu Dhabi. Naurally it’s not the same story at the Fairmont Cairo where one guest recently commented on Tripadvisor that it would feel more comfortable if they removed the burnt out cars in front of the hotel.
Mr. Kent understandably preferred to focus his remarks on the upcoming Fairmont Riyadh, Business Gate, located just north of the city that is part of a new mixed-use development project comprising the hotel, a convention centre and commercial real estate space that will house multinational corporations as well as regional companies. Demand for new hotels is excellent in Saudi Arabia right now, he said.
Still the message from luxury hotel groups in the Middle East this year is clear enough: there’s a boom in the Oil States unaffected by the Arab Spring, with Abu Dhabi an exception for most operators, and a bust everywhere else.