STRATEGY

BOOM TIMES RETURN TO THE GULF

Viability Management Consultants’ latest pipeline survey focused on the five ‘hot markets’ for hotel development in the Gulf — Abu Dhabi, , Doha, Makkah and Riyadh — and revealed fast-paced growth, the emergence of exciting new brands MARKET and mammoth master projects UPDATE By Guy Wilkinson

n April and May of this year, Viability Management Consultants canvassed 111 hotel chains active in the , 49 — or 44% — of which confirmed they were planning to open new hotels. In total, these operators will be opening 189 hotels and hotel apartment buildings with 64,063 keys across the five subject cities between now and 2017. By comparison, the pipeline for the entire GCC market — including Jeddah, Al Khobar, Kuwait, Manama, Muscat, Salalah and other important cities — totalled 199 hotels in 2007, rising to a peak of 325 in 2009. One key difference in this year’s survey methodology was that for the first time Ithis year we included branded hotel apartments. In terms of geographical distribution, the largest slice of the pie Rotana, which is adding four new ho- predictably went to Dubai, with the chains reporting that 31% tels to its existing 11 properties there. of their future pipeline, or 20,227 keys in 56 hotels and hotel Marriott is also planning four, includ- residences, would be located there. Next was Makkah, with ing the region’s first Edition hotel, a 15,981 keys in just 25, larger-than-average properties, repre- concept created with boutique hotel senting 25% of the pipeline. The rest of the five-city pie was pioneer Ian Schrager. Millennium & divided between Abu Dhabi, Doha and Riyadh, with 17%, 14% Copthorne and Mövenpick will each and 13% of the total keys respectively (see chart on page 60). open three new hotels in the city. According to the chains, we should see around 15,000 keys The UAE capital has become coming on line each year from 2013 to 2016, with just under something of a lure for upper upscale 4000 known at this stage for 2017. Some 70% of the pipeline brands. Over the coming years, Four keys will be rated five-star, 23% four-star and just 7%, three- Seasons will become a neighbour to star. Hilton Worldwide reported the largest number of keys in the newly-opened Rosewood on Al the five cities, at 8211, followed some way behind by Starwood, Maryah Island, while Millennium & with 5161; Millennium (4636); Marriott (4535); and Accor Copthorne Middle East will open the (3530). There were several unexpected newcomers in the top spectacular 674-key Millennium Bab 20, including Damac, Anjum and Elaf. Al Qasr next to the Etihad Towers and a Biltmore hotel in Al Buteen — ABU DHABI MOVES UPSCALE the second to be so named after the Millennium Bab Al Qasr, Abu Dhabi. With 36 confirmed chain hotel projects promising 10,745 fu- original in Los Angeles. Abu Dhabi ture keys, Abu Dhabi continues to be a focus for local hero, now has its second St. Regis and is Beyond the supply confirmed by set to get its first W hotel, following the chains, Abu Dhabi has numerous Starwood’s deployment of this brand exciting new tourist and downtown in Doha. Perhaps most impressive areas that should see scores more ho- will be the second Fairmont hotel in tels coming up in the medium term, the UAE capital, a grand Arabic-style both on its natural offshore islands edifice destined to become a major and in mainland suburbs. Among landmark on the Breakwater near the former are the sizeable Saadiyat, the Marina Mall, with 812 keys. Reem, Al Maryah, Yas and Lulu is- Some 70% of the pipeline keys will be rated five-star, 23% four-star and just 7%, three-star”

Dubai Pearl will introduce brands such as Bellagio and MGM.

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InterContinental is expected to open by the end of 2013. lands, as well as the smaller, exclusive Nurai and Nareel islands. Main- land districts include Al Raha Beach, the ‘green’ Masdar City, Ghan- toot Green City and the Capital District, a long-term project to create a major new CBD in Khalifa City.

DUBAI CASHES IN ON CONDO APARTMENTS As the region’s main focus for pipeline activity, Dubai is also the cruci- ble of innovation in terms of lodging product, with condo apartments — serviced (hotel) apartments that are individually available for sale freehold to all comers — rapidly emerging as an exciting new focus. Da- mac, known throughout the region for its freehold residential towers, has entered the transient lodging sector with four new condo apart- ment projects next to the . One of these, the 1940-unit Damac Towers by Paramount will feature management by Paramount Hotels & Resorts, a new chain established under licence in Dubai. Expect many more Damac condo units in Dubai and beyond. The Ad- dress Hotels + Resorts, pioneers of the concept in the region, is also launching four condo apartment towers next to the Burj, in addition to the launch of new boutique brand, Vida. The future Viceroy Hotel on The Palm is also selling its rooms con- do-style. Other brands planned for conventional resorts on The Palm include Hilton, Kempinski, Sofitel (now open), W and Waldorf Asto- ria. Facing the Palm, the Pearl of Dubai project continues on its gradual path to fruition, promising new-to-market brands Baccarat, Belaggio, MGM and Skylofts. Elsewhere in the city will be a beach resort by Four Seasons on Jumeirah Beach Road and urban properties by Conrad, Rosewood and St. Regis, plus a third Sofitel and another W. The Palaz- zo Versace is 80% complete on Dubai Creek, while the second, 804- room tower of the JW Marriott Marquis opens by 2015. Startling announcements by the Dubai government over the last few months have raised hopes of major new hotel districts emerging in the Perhaps most impressive will be the second Fairmont hotel in the UAE capital, a grand Arabic-style edifice destined to become a major landmark on the Breakwater near the Marina Mall, with 812 keys”

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medium term, such as Mohammed bin Rashid City, in City performance compari- which 100 new hotels and ’s largest mall are son Q1 2013 (occupancy %) envisaged. Even projects thought to have received the coup de gras at the onset of recession have now expe- 100 rienced major revival, from to and from to Jebel Ali. 80

DOHA TURNS ON THE STYLE Boasting a chain hotel pipeline of 8903 keys in 33 fu- 60 ture properties, the Qatari capital is stealing the march even on Dubai in terms of trendy new-to-the-region 40 brands. These include perhaps most excitingly, the Mondrian Doha, a brand of Morgans Hotels Group, the 20 Startling announcements by the Dubai government over the 0 Jafza Convention Centre in Dubai will house Doha last few months have raised hopes of Dubai Riyadh an office complex, a hotel and a food court. Makkah major new hotel districts emerging Abu Dhabi in the medium term, such as property from the Grand Heritage chain. New York-based lifestyle hotel specialists A little further north, local owner-operator Mohammed bin Rashid City, in which originally founded by boutique hotel pio- Katara is planning the 614-key Lusail Ma- 100 new hotels are envisaged” neer Ian Schrager, in the 1980s. The uber- rina Iconic Towers, which, if the artist’s hip property will be in the West Bay lagoon impression is accurate, are more than aptly area, where future neighbours will include a named. Qatari Diar’s Lusail district is even- Waldorf Astoria, a Pullman and yet a third tually expected to house 22 hotels.

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Boasting a chain hotel pipeline of 8903 keys in 33 future properties, the Qatari capital is stealing the march even on Dubai in terms of trendy new-to-the- region brands”

Super-exclusive Mandarin Oriental will debut its first Gulf property in the styl- ish Musheirib urban regeneration project near the Corniche, as will Accor’s M Gal- Plans for Mohammed Bin Rashid City, Dubai. Radisson Blu Hotel, Riyadh Ring Road will open in Q1 2015. lery lifestyle brand. The same area will also feature a new Park Hyatt and an elegant Anantara, meanwhile, will manage a well- — one of many planned by the mega developer — will Shaza hotel featuring contemporary Ara- ness-themed resort located on a private answer this call by including jetties for five floating ho- bian architecture. island off the coast. tels to house 25,000 soccer fans. But the football tour- The second Missoni in the region will Qatar promised FIFA it would add nament is far from the only impetus to building hotels open on Doha’s C Ring Road, while the 80,000 keys to its transient lodging in- as Qatar’s gas-fired economy continues to underpin Capella chain, established by former Ritz- ventory before the 2022 World Cup, so major urban expansion, with real estate projects from Carlton renegades, will manage a hotel there are no holds barred on development. Doha Festival City to Wa’ab City all containing impor- at Education City under the Solis brand. Barwa’s US$5.5 billion Oryx Island project tant hospitality components.

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Room distribution There are 189 chain properties with 64,063 keys opening in the five cities by 2017, with the keys distributed as follows: Riyadh 2017 3* 2013 Abu Dhabi 13% 6% 23% 7% 4* 17% 23% Makkah 25% 2016 21% CITY YEAR 2014 STAR RATING 25% 14% Doha Lusail Marina Iconic Development in Qatar. 31% 25% 5* 70% Dubai 2015

Chain ranking by pipeline keys in the five cities combined 15000

12000 Sofitel Riyadh is due to open in 2015.

MAKKAH, A MEGA HOTEL METROPOLIS IN SAUDI ARABIA With 3.1 million Hajj visitors in 2012 and a 9000 leap to 17 million projected by 2025, Mak- kah continues to increase in importance as one of the world’s top religious tour- ism destinations. In response to this rapid growth, the Jabal Omar development, lo- 6000 cated on 2.2km2 of prime land overlooking the Holy Mosque, will create no less than 38 hotels containing 13,500 rooms and 34,000 beds, with a peak season capacity for 100,000 pilgrims. 3000 According to the Jabal Omar Develop- ment Co, some 28 operators have been signed up to manage the hotels, with four top global chains already having reported almost 8000 keys between them: Hilton (3862), Hyatt (1028), Marriott (1611) and 0 IHG Starwood (1,496). This represents half the Elaf Hyatt Accor Others Katara Damac Rotana Rezidor Marriott entire future pipeline in Makkah. Formosa Starwood Wyndham Kempinski Mövenpick Millennium The Address Best Western Hilton will open six hotels in the Jabal Anjum Hotels Fairmont Raffles Omar development; four Hiltons, a Con- Hilton Worldwide rad and a Doubletree. Hyatt is planning a Hyatt Regency, a Hyatt Place (residential style units) and a mid-market Hyatt House According to the Jabal Omar Development Co, some 28 operators (this brand was formerly known as Sum- have been signed up to manage the hotels, with four top global merfield Suites). Marriott is deploying its chains already having reported almost 8000 keys between them” complementary JW Marriott, core brand Marriott and Courtyard by Marriott arse- nal, while Starwood’s equivalent move is to

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Hilton Worldwide is RIYADH – MOVING FROM UNDER- region’s first Hotel Indigo (Intercon’s bou- developing no less than TO OVER-SUPPLY? tique brand), as well as a Grand Wyndham, With a population of more than five mil- a Doubletree and a Hilton Garden Inn. seven new hotels with 1450 keys lion, Riyadh is easily the Gulf’s largest me- Hilton Worldwide is developing no less in Riyadh comprising two core- tropolis. Yet it has historically languished than seven new hotels with 1450 keys in brand Hiltons, three Doubletrees behind other cities in the region in devel- the city, comprising two core-brand Hil- oping a broad base of international and re- tons, three Doubletrees and two Hilton and two Hilton Garden Inns” gional chain hotels. This is about to change, Garden Inns. as 39 chain properties with 8207 keys have InterContinental’s four projects in Ri- been confirmed through our survey. These yadh additionally include a Crowne Plaza figures compare to an existing inventory in at the ITCC (Information Technology the Kingdom’s entire Central Province, in- Communications Complex, a ‘smart city’ propose a Westin, a Sheraton and a Four Points. Mil- cluding Riyadh and other towns, of 60 ho- project similar in approach to Dubai’s In- lennium has no confirmed Jabal Omar hotels yet, but tels with 9105 rooms and 276 mostly infor- ternet City) and a Holiday Inn. Rezidor’s has announced the no less impressive, 1400-key Umm mal ‘furnished apartments’ with 7226 keys, Riyadh pipeline comprises two Radisson Al Qurah Hotel and the Copthorne Hotel Nobola Mak- as per the Saudi Commission for Tourism Blus and a Park Inn. kah (756 units). Best Western is also opening two new and Antiquities. A number of other operators are plan- properties in Makkah, including the 1200-key Best Riyadh’s key project currently is the ning more than one property, including Ac- Western Bougary Hotel. King Abdullah Financial District (KAFD), cor (Sofitel and Suite Novotel), Best West- There are several other major hospitality which will eventually offer 80 towers and ern, Cristal, Hyatt (Hyatt Regency and developments in town, not least the Abdul Latif Jameel three million m2 of floor space for financial Park Hyatt), Marriott (two Courtyards), Real Estate Co’s Jabal Al Kaaba project, where a 1743- companies, a few minutes drive north of the MENA, Millennium and Rotana (Centro key hotel will be the first of 8500 keys planned by the central Olaya district on King Fahd Road. and Rayhaan). Other mega projects such developer under its own new Anjum brand. The 1.5km2 Part and parcel of the elegantly designed as Prince Alwaleed’s 16 square kilometre King Abdul Aziz Endowment (Dokaee) project will project are its hotels, which will include Riyadh Land promise many more hotel de- also feature hotels and hotel apartments. the city’s second InterContinental and the velopment opportunities.

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