Op­por­tu­nity for mid-mar­ket by Hala Matar Cho­ufany, HVS

Hospitality News Middle East - - CONTENTS - hvs.com

The re­gion has un­der­gone a range of so­cio-po­lit­i­cal and eco­nomic shifts that have un­doubt­edly had ram­i­fi­ca­tions for the MENA ho­tel in­dus­try. Hala Matar Cho­ufany, pres­i­dent, Mid­dle East and Africa at HVS, speaks about the op­por­tu­ni­ties emerg­ing in the sec­tor.

His­tor­i­cally, the main in­vestors in the Mid­dle East’s hos­pi­tal­ity mar­ket have been gov­ern­ment en­ti­ties, fol­lowed by semi-pri­vate in­vest­ment en­ti­ties. Ap­prox­i­mately 70 per­cent of the ex­ist­ing ho­tel in­ven­tory in the up­per scale and luxury mar­ket has been de­vel­oped and con­tin­ues to be owned by these en­ti­ties. The pres­ence of up­per scale and luxury ho­tels in key cities in the Mid­dle East, most no­tably in the GCC, is well es­tab­lished, and, with the an­tic­i­pated growth in tourism in the re­gion, sup­ported and fa­cil­i­tated by the ex­pan­sion of tourism in­fra­struc­ture, pri­vate own­ers and high­net-worth in­di­vid­u­als are look­ing for suit­able op­por­tu­ni­ties for the de­vel­op­ment of ho­tels.

Plenty of po­ten­tial for mid-mar­ket

Mid-mar­ket ho­tel de­vel­op­ment be­came one of the fastest grow­ing and suc­cess­ful seg­ments in North Amer­ica more than a decade ago. To be­gin with, de­vel­op­ers were drawn to the ap­peal of the mid­scale ho­tel in­vest­ment model - in many cases, an in­vest­ment sup­ported by low de­vel­op­ments and op­er­at­ing costs - which, in turn, gen­er­ated higher re­turns than the full ser­vice, four-to-five-star ho­tel coun­ter­parts. An­other plus was that the mid-mar­ket ho­tel proved to be more re­silient to the credit crunch and global eco­nomic down­turn, ex­pe­ri­enc­ing a lower over­all de­crease in REVPAR than the typ­i­cal four-to-five-star ho­tel rat­ing dur­ing this time. De­spite a se­ries of cur­rent and fu­ture macroe­co­nomic chal­lenges, the MENA ho­tel in­vest­ment and de­vel­op­ment pipe­line re­mains strong, par­tic­u­larly amongst mid-mar­ket branded ho­tels. The Mid­dle East con­sists of a di­verse range of ho­tel mar­kets that are stim­u­lated by var­ied seg­ments of de­mand, and, as pri­mary mar­kets con­tinue to ma­ture and sat­u­rate with four and five-star ho­tels, sec­ondary mar­kets are be­gin­ning to progress, sup­ported by im­proved modes of ac­ces­si­bil­ity and in­fra­struc­ture de­vel­op­ments.

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