PiPeline : Middle east
InterContinental Dubai Marina Bay Central is set to open at the end of 2014 .
Homegrown contenders Big brands face increasing competition from local hospitality groups that can wield on-the-ground knowledge and tap into powerful financial backing .
Jumeirah Group , the Middle East ’ s breakout poster child , isn ’ t the only homegrown brand on the global scene these days . Rotana , long a favorite in the UAE , recently expanded into Turkey , Oman and Afghanistan .
What is also new is that some of the sovereign wealth funds that form the backbone of regional investment no longer want to hand over their hotels to outside operators . They are keeping it all in the family by developing their own management companies . Two models already in the market are Al Diar and Danat in Abu Dhabi , brands developed by Abu Dhabi National Hotels and the National Corporation for Tourism & Hotels , respectively , according to Wilkinson .
Global hotel companies are responding to these trends by bringing new flags to new destinations across sectors . IHG is rolling out Hotel Indigo to the MEA region . Marriott International is expanding its luxury JW Marriott brand . Starwood will fly its W flag over a flurry of new Middle East hotels in
destinations such as Tel Aviv , Amman , Muscat and Dubai . Its French-accented sister brand , Le Méridien , is also growing fast . Plus , there ’ s momentum behind Carlson ’ s lifestyle offer , Radisson Blu , and boutique brands like Morgans Hotel Group are launching their lifestyle offerings in Doha .
Money , management and more The investor base remains largely the same , says François Baudin , senior vice president , development , Europe , Middle East and Africa , for FRHI Hotels & Resorts . “ The investment climate continues to be very strong ,” he says . Hotel investors in the region are traditionally local rather than foreign investors with individuals , governmentbacked developers and large real-estate groups diversifying their portfolios . “ These investors have strong regional roots and share a long-term outlook for their hotel assets , which is in line with hotel operators ’ long-term perspectives ,” Baudin says . “ But we also see continued interest from investors from the CIS , Russia and India .”
Developers like Qatar ’ s Katara Hospitality continue to gain momentum . Dubai-based Emaar Hospitality is expanding rapidly with its The Address
Hotels + Resorts brand and boutique Vida Hotels and Resorts .
At the same time , brand growth is still very much dominated by management contracts . But it is the structure of those contracts that is evolving , according to some industry insiders . “ Middle East markets are becoming more competitive and maturing nowadays ,” says Christophe Landais , managing director in the Middle East for Accor . “ That ’ s having some effect on the management contract terms , including the addition of clauses that might not have been normal in the past . The old rule of thumb of offering ‘ 3 / 10 fees ’ representing a 3 % base fee and 10 % incentive fee is virtually nonexistent in today ’ s market .”
Chiheb Ben Mahmoud , executive vice president , head of Hotels & Hospitality Group , Middle East and Africa , Jones Lang LaSalle , Dubai , says that doesn ’ t translate to operators putting more skin in the game . “ Compared to their commitments in other parts of the world , operators remain cautious in the Middle East , and management agreements are relatively ‘ plain vanilla ’ with limited extra risk ( financial or otherwise ) taken on by the operator ,” he says . Wilkinson adds that that the right deal will see operators signing on to performance provisions .
56 HOTELS June 2014 www . hotelsmag . com