Hotel groups continue looking West

Middle Eastern hospitality industry companies are looking to expand their hospitality sector portfolios in Europe and the US.

A sign for a Travelodge is seen at Hickstead in Sussex in southern England March 16, 2008.  A source close to fast-growing budget hotel chain Travelodge told Reuters the firm's owners were in early stage talks about a sale of the chain to Whitbread,  which owns its main rival Premier Inn.     REUTERS/Luke MacGregor (BRITAIN)
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Middle Eastern companies are looking to expand their hospitality sector portfolios in Europe and the US as the regions continue to suffer from the global credit crunch. Last week, the Dubai-based Jumeirah Group announced plans to open a five-star hotel in Glasgow, Scotland. "As a group we are trying to expand internationally, and the hotel in Glasgow is a management contract," said Gerald Lawless, the executive chairman of the Jumeirah Group. The 25-storey development, which will be located in Glasgow's financial district, will be Jumeirah's fifth hotel deal in Europe and is scheduled to open in 2011. The development will comprise 160 rooms, 85 serviced apartments and a 630-seat ballroom. "So far, our hotels in the UK have been holding up against the economic conditions and our third quarter results were very positive," said Mr Lawless. The group currently has two hotels in the UK - the Jumeirah Carlton Tower and Jumeirah Lowndes Hotel. "And we will continue to actively seek more management contracts in Europe, the US and all over the world in the coming period," said Mr Lawless. In the UK, however, consumer confidence has plummeted to a record low. The GfK NOP barometer of UK consumer confidence scored minus 39 in July, the lowest level recorded since the survey began in 1974 and down from minus 34 in June. "At minus 39, this is four points lower than in March 1990, when the UK was heading into the grip of the last recession," said Donna Culverwell, an analyst from GfK NOP. "Perhaps I'm being too optimistic," said Mr Lawless, "but I believe that the luxury travel market is safe from downturn because the incomes of travellers from that segment are less likely to be affected." Jumeirah Group recently announced that it would go ahead with its global expansion plan and roll out 60 hotels by 2012. The hotel operator has signed five new hotel contracts in the past two weeks, bringing the total number of properties under development to 19, while it currently manages 11 hotels and resorts. Meanwhile, Travelodge Hotels, the UK budget hotelier owned by Dubai International Capital, has teamed with the German retailer Aldi Group to develop joint supermarket and hotel sites in the UK. Travelodge would develop a 74-room hotel above Aldi's store in Newquay, which it expected to open next year, the company said yesterday. It is due to open another hotel with 55 rooms adjacent to Aldi's site in Middlesbrough at the end of next month. Travelodge will invest £2 million (Dh12.7m) in the Middlesbrough project and £2.9m at Newquay. The hotelier said it would recruit 20 employees for each site. "By developing sites together with Aldi, we are sending a clear signal that the budget sector in the UK is going to make the most of the opportunities presented in the economic downturn," said Paul Harvey, the managing director for development at Travelodge. "The credit crunch is freeing up sites for development that previously would not have been viable for either of us." Some UAE travel agents are also starting to look into acquiring more market share in western markets at a time when local businesses are less competitive. "This is a good time for us to go into the US market because prices are lower than before," said Adnan Aridi, the general manager of Alpha Tours, one of the largest travel agencies in the UAE. "About seven per cent of our business comes from the US and we are hoping to increase it by 10 percentage points [to 17 per cent] by the end of this year through more advertising and travel shows."