Hospitality group IHG 'cautiously optimistic' on Middle East growth outlook in 2022

Company in 'deep discussions' with investors to bring its luxury brands Regent and Kimpton to Egypt, the UAE and Saudi Arabia

InterContinental Ras Al Khaimah Resort and Spa. Photo: IHG
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Intercontinental Hotels Group, which operates the Crowne Plaza and Holiday Inn brands, among others, is "cautiously optimistic" about the outlook for 2022, with regional growth to be driven by the Fifa World Cup in Qatar, the return of corporate meetings and the coming holiday season.

The UK-based global hospitality company is forecasting an occupancy rate of about 80 per cent this year in the region, amid demand from its key markets in India, Egypt, Saudi Arabia and the UAE across its brands, Haitham Mattar, managing director of India, Middle East and Africa at IHG Hotels & Resorts, told The National on the sidelines of the Future Hospitality Summit in Dubai.

This comes after a "healthy performance" in the first half of the year and "strong demand" indicators in the third quarter, he said.

"Quarter four being a traditionally busy month gives us great confidence that we will close the year on a very high note - we are confident with our growth strategy, not only on trading but on growing our pipeline as well," he said.

"We are signing deals throughout the rest of the year."

IHG is focused on bringing new brands to the region, particularly in the luxury hotels segment.

The company is in "deep discussions" with its investors to introduce its top tier brands Regent and Kimpton in Egypt, the UAE (particularly Dubai) and Saudi Arabia (Jeddah and Riyadh), Mr Mattar said.

"We expect some to be finalised by the end of the year," he added.

IHG, which has 174 hotels in the region, plans to open an additional 130 properties over the next five years, Mr Mattar said. About 45 per cent of these planned hotels are in Saudi Arabia, while the rest will be in India, Egypt and the UAE.

The company is deepening its presence in Saudi Arabia's tourism giga projects, where it has already signed deals for its Six Senses and Intercontinental brands in The Red Sea Development Company's luxury tourism project. It has also signed deals for its Six Senses brand with the Diriyah Gate and Amaala tourism projects.

"We are also now in the finalisation stage of signing another hotel with Neom ... and we're about to announce it soon," Mr Mattar said, but he declined to elaborate as the deal has yet to be completed.

Unveiled by Saudi Arabia's Crown Prince Mohammed bin Salman in 2017, Neom is the kingdom's flagship business and tourism development on the Red Sea coast and a central project in its Vision 2030.

IHG, which currently employs 4,500 people across Saudi Arabia, aims to hire 6,000 citizens of the kingdom by 2030. It has a partnership with the Ministry of Tourism to develop local talent for the hospitality industry.

The large-scale projects being developed in the kingdom are part of the country's efforts to diversify its economy, cut its dependence on oil revenue, create jobs and attract foreign investment. Development of non-oil sectors such as tourism are crucial pillars of the kingdom's Vision 2030 economic transformation agenda.

Demand for luxury hotel stays has remained strong, despite higher inflation rates, as people are eager to travel and indulge in experiences after two years of Covid-related lockdowns, Mr Mattar said.

"Due to inflation, many hotel companies had to increase rates in order to meet their cost levels, but we've seen acceptance tremendously from consumers who continue to vote with their feet and they're showing up," he said.

In the first half of 2022, IHG hotels' revenue per available room (RevPar) rose 20 per cent year on year, driven by performance in the second quarter particularly, he said.

In the third quarter, demand continued to increase with a "healthy balance between occupancy and rates", he added.

IHG, which operates seven hotels in Doha, is in "deep discussions" to add new brands and properties in the city, Mr Mattar said.

It expects the World Cup football tournament to have a "spillover effect" in neighbouring Gulf cities such as Dubai, Riyadh and Jeddah.

It is forecasting occupancy rates of 80 per cent at its properties in Doha and the UAE in November and December, Mr Mattar said. RevPar is expected to increase 10 to 15 per cent year on year during this period.

The group expects to return to pre-pandemic levels of business by the end of 2023, in line with hospitality industry forecasts, he said.

IHG operates eight of its core brands in the Middle East — InterContinental, Six Senses, Hotel Indigo, Voco, Crowne Plaza, Holiday Inn, Holiday Inn Express and Staybridge Suites.

It currently has 104 hotels across nine countries in the Middle East, including 30 in the UAE and 37 in Saudi Arabia, with 63 hotels in the pipeline in the region.

IHG will be opening six hotels in the remaining months of 2022 and 15 in 2023 in the Middle East and Africa.

Updated: September 20, 2022, 9:09 AM
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