A recap of the first day of the Gulf & Indian Ocean Hotel Investors’ Summit held in Abu Dhabi, with takeaways, quotables and more highlights from the event.
ABU DHABI, United Arab Emirates—The Gulf & Indian Ocean Hotel Investment Summit is known for its forthright commentary, which could be perceived by some to be a metaphor for angst between owners and operators.
As many markets in the region strive to create a new vision for themselves, brands, destination tourism, entertainment demand drivers and economic visions such as Abu Dhabi 2020 and Saudi Arabia 2030 are creating heightened competition. With these efforts come the rush and pain of creating the demand to fit the supply, according to speakers on day one of GIOHIS.
The good news is that the governments in the region are not merely coming up with some nice marketing pamphlets but understand the need for quality infrastructure both around bricks, concrete and mortar and intangible assets such as ease of visa documentation.
Philip Wooller, area director, Middle East and Africa, for STR, the parent company of Hotel News Now, kicked off the conference, held at the Park Hyatt Saadiyat Island, by noting that full-year 2018 global revenue per available room in the Middle East fell by 5.7%.
“It is important to know the Middle East performs at a different level, with average RevPAR of around $100 and, at the lowest occupancy, (average daily rate) is around $154, but that number has come down from around $230,” Wooller said.
“Beirut and Jeddah are the only markers with positive RevPAR changes, and Dubai saw a RevPAR drop of 8% in local currency terms. I think there are risks for all markets, and I am not sure we are the bottom of the pile yet,” he added.
Might this be teething pains of long-term visionary excellence? Even so, the region might be in for a little more pain.
One owner seemingly feeling some pain is Anil Bhardwaj, director of AA Almoosa Enterprises, who said he felt operators were missing so many tricks in the market.
“When rates are falling as they are, you have to start to react to that. Firstly, how do you minimize that fall? … Operators do not pull their weight behind this. There are four main players, with such large presences and networks. Cannot they look at new markets (to bring in demand)? No, they do not do that,” he said.
The sense on the first day of the conference was that there is a great deal of visionary, long-term innovation, unique demand drivers and operators with strong track records debuting or enlarging their presence in the market, but on a day-to-day basis the numbers show much to be worried about.
Time to roll the sleeves up.
Quotes of the day
“Build it and they will come is particularly true in the Kingdom of Saudi Arabia. Currently there is a quote for hajj of one person for every 1,000 in the population, so if the government doubles that quota, there will be absolutely no problem about filling supply.”
—Abdellah Essonni, chief hospitality officer, MAAD International Co.
“There is a change of investment guard happening in The Maldives. It used to be local families, but now we are seeing a rise in institutional investors.”
—Ghaly Murthala, founder and managing director of Morteza Capital, speaking of his home market where he said acquisition prices of $4 million and $5 million per key is not unheard of.
Tweet of the day
Indian Ocean hotel transaction volume fct at USD 500m-750m with a very strong year for Maldives. Mauritius, Seychelles, Zanzibar, Maldives all traded in 2018 #GIOHIS— xander nijnens (@XanderJhb) 4 February 2019