Plans to build 20 Holiday Inn Express budget hotels in the Gulf for as much as US$3 billion (Dh11.01bn) have been pushed back because of the global downturn, according to Sami al Ansari, the chief executive of the company behind the development. Ishraq Gulf Real Estate Holding, which is majority-owned by Dubai International Capital, the investment arm of Dubai Holding, revealed the slowdown at the opening of its $40 million 381-room Holiday Inn Express at Dubai Airport yesterday.
"Of course, no one in his wildest dreams expected this kind of a recession," Mr al Ansari said. "How fast we can develop these hotels is really down to the market needs, requirements. We have slowed down in the last year simply because some of the projects we were about to embark on, when we revisited the feasibility, we found that returns were diminishing. We sort of held off." Ishraq owns and operates the hotels in a franchise arrangement with InterContinental Hotels Group, as the exclusive developers of the brand in the GCC, except for Saudi Arabia.
The next hotel, which is being built in Bahrain, will not open until the last quarter of next year. Fujairah, Muscat and Abu Dhabi were under consideration for the brand, Mr al Ansari said. There were signs of recovery in Dubai as the company was beginning to see higher occupancy levels in its three existing Holiday Inn Express hotels in the emirate, he said. Mr al Ansari speculated that more tourists were visiting Dubai as it becomes a more affordable destination.
"I think gone are the days when Dubai will only attract the jet-setters," he said. The Ishraq chief said the Holiday Inn Express hotels in Dubai were still profitable despite the sharp drop in revenues experienced in the industry last year. Occupancy levels in Dubai increased by 6.1 per cent to 72.1 per cent in January compared with the same month last year. Average daily rates, however, were down 23.4 per cent to $180.26 in the emirate.
"Dubai even now still represents better returns on investment than some of the other mature markets," Mr al Ansari said. Analysts said budget hotels were needed in Dubai and the wider region, with much of the development having been focused on five-star properties. "As all markets mature you start to see other categories of hotels," said John Bamsey, the chief operating officer at InterContinental Hotels Group for the MENA region.
InterContinental has the largest presence of any hotel company in the region, with 76 properties in the Middle East. The group already has 16 hotels in the UAE. It plans to open 46 in the MENA region in the next three years, including its Crowne Plaza and InterContinental brands. InterContinental plans to hire 33,000 employees for the 46 hotels it expects to open in the Middle East and Africa in the next three years.
The group, meanwhile, is pushing ahead with plans to open a further six hotels in the UAE. Those include an InterContinental hotel at Al Raha Beach development in Abu Dhabi, InterContinental hotels in Ras al Khaimah and Fujairah, and two more Crowne Plaza hotels in Dubai. @Email:rbundhun@thenational.ae