Middle East hotel industry experts forecast strong investment opportunities ahead of AHIC 2017

Published on : Wednesday, January 11, 2017

ahicHotel investors, owners, consultants and operators alike share a positive outlook for the Middle East hospitality industry in 2017, with strong market fundamentals in place and attractive investment opportunities on the horizon.


In the lead-up to the 13th edition of the Arabian Hotel Investment Conference, being held at Madinat Jumeirah in Dubai from 25 to27 April 2017, key speakers and sponsors at the annual knowledge platform and networking event revealed their forecast for the year ahead.


Jonathan Worsley, Founder of AHIC, Chairman, Bench Events and Board Director, STR, said: “With AHIC 2017 just months away, the debate is already beginning among our speakers. As usual, we expect AHIC to be thought-provoking, topical and at the forefront of promoting hospitality investment in the Middle East. From discussing contract exits, reflagging and third party management to global catalysts for change, asset management and outbound investment, AHIC 2017 promises to present the very latest market intelligence and inspire the investment community, globally as well as locally.”



The experts acknowledged that while aspects of both development and operations were challenging in 2016, the market remained robust with investment potential.



Olivier Granet, Managing Director & Chief Operating Officer at Accor HotelServices Middle East, commented: “Despite the oil price, the spotlight on elections globally and otherwise volatile regional conditions, our key partners in the region still identify in present market conditions some attractive opportunities to invest. Investors may be cautious with their real estate investments in light of RevPAR contractions across certain markets in the region, however, many markets in the region are just beginning to mature and still represent attractive investments across many asset classes”.



Hamad Abdulla Al-Mulla, Chief Executive Officer, Katara Hospitality, agreed that 2016 “will be remembered as a challenging year for hospitality investors as a mix of global geopolitical and economic issues has resulted in a more cautious approach towards investment decisions”.



However, looking forward, Al-Mulla said: “The Middle East hotel market remains a vibrant and exciting one for investors. The region’s fundamentals are strong, making it an attractive investment destination. In Qatar for example, the outlook for the hotel industry is especially promising. According to the Ministry of Economy and Commerce, in 2015, income from tourists amounted to QAR18.3 billion, nine-times the QAR2.1 billion recorded in 2010, demonstrating the clear opportunity for proven investors like Katara Hospitality in the region”



Joe Sita, CEO, IFA Hotel Investments, added: “I would agree that 2016 has been a more challenging year particularly with respect to rates. Occupancy has remained robust in prime areas, however, supply dynamics have led to an element of price competition that was previously absent from the market. Notwithstanding this, we still feel that, most specifically in Dubai, the market remains robust and continues to generate higher yield than competitor arenas. We therefore still see further investment in this sector in the medium term”.



One of the hotel markets viewed as being particularly robustis Ras Al Khaimah, which bucked the trend in the summer of 2016 and reported a 14% year-on-yearincrease in RevPar between June and August 2016 compared to the same period in 2015, and an increase of 15.9% in occupancy during the same period, according toRas Al Khaimah Tourism Development Authority.



Hotel owners and developers in Ras Al Khaimah remain bullish for the year ahead, bolstered by the emirate’s attractive investment environment.



Abdullah Rashed Al Abdooli, Managing Director of Al Marjan Island Company, which will open new hotels in 2017 in partnership with Mövenpick Hotels & Resorts and SuperCasa, commented: “We offer very attractive advantages to the investors. These include: 100% foreign ownership in free zones, 0% income and personal tax, 0% corporate tax and VAT, 100% repatriation of profits and capital and 100% liberal labour laws.



“The emirate offers also no foreign exchange controls, no hiring restrictions, no barriers to trade or quotas, and a one-window clearance for licenses and consents.”




As the emirate continues towards its target to attract one million annual visitors by 2018 and three million visitors per year by 2025, YannisAnagnostakis, CEO of RAK Hospitality Holding LLC, added: “As a company that is deeply rooted in the Emirate of Ras Al Khaimah, we are certainly biased towards RAK, and rightly so. The emirate is living proof of the tremendous success witnessed in its hospitality and tourism sector.


“What increases the appeal of the Emirate on the tourism front is that the growth in demand for its hotel rooms is exceeding the growth in supply, which creates attractive opportunities for investors. Additionally, the demographic mix that has evolved in recent years underlines the momentum that the emirate is generating outside the GCC.”




Another market with potential for further growth is Bahrain, reported Jerad Bacher, Executive Director, Tourism and Leisure at the Bahrain Economic Development Board.




“In Bahrain, we have seen somewhat less volatility in hotel performance mainly due to a lower inventory of supply paired with a consistent volume of demand. We expect market stability to continue in 2017 with moderate supply growth and continued advancement in demand. We have a strong pipeline of new inventory coming into Bahrain over the next five years; however, the products that are in development will be demand simulators and have an aggregated inventory that the market can withstand,” said Bacher.



The AHIC speakers agreed that future investment would be focused on exciting master developments, new brands and gaps in the market, from growth in the economy, mid-market and upscale segments to luxury at scale, such as all-inclusive premium resorts.



AHIC 2017 is the premium knowledge and networking platform for hotel investors in the Middle East.

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