Investors race to sign hotel deal

InterContinental Hotels Group has reported that a consortium of 12 regional investors will finance the US$150 million launch and development of more than 20 Express by Holiday Inn hotels across five countries in the GCC.

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By  Sarah Campbell Published  November 1, 2005

InterContinental Hotels Group has reported that a consortium of 12 regional investors will finance the US$150 million launch and development of more than 20 Express by Holiday Inn hotels across five countries in the GCC. The owning company for the hotels, Ishraq, will control the rights to the three-star brand — the first international brand of its kind to enter the Arabian Gulf countries on this scale — across the GCC, with the exception of Saudi Arabia. Dubai International Capital (DIC), the international investment arm of Dubai Holding, is Ishraq’s anchor investor and the key player in the deal, which was structured, arranged and placed by Addax Investment Bank, the Middle East investment bank in Bahrain. “There is a huge gap in the market for branded budget hotels, which we believe are essential to maintain the target visitor figures for the next 10 years in the Gulf,” said Sameer Al Ansari, CEO of DIC. “Express by Holiday Inn is the largest budget hotel brand in the world, with proven results, and the launch in the Middle East will help fill the gap for affordable accommodation at guaranteed quality,” he added. Yousef Al-Essa, general manager of Addax Investment Bank, said: “This is the first deal of its kind, in terms of profile, regional spread and investors, encompassing the premier institutional and high-net worth investors from each of the five countries included in the deal. In fact, the transaction met well with potential investors and was heavily over subscribed.” What makes the deal stand out is that this is the first time that investors throughout the Arabian Gulf countries have come together to develop a hotel fund in the Middle East with the objective of creating a chain of hotels under the same brand name across multiple countries. Hospitality Management Services Middle East Ltd (HMS), the master franchise developer and operator of Express by Holiday Inn in the Gulf will operate the 20 properties on behalf of Ishraq. The first property will be built at Knowledge Village, part of the Dubai Technology and Media Free Zone (TECOM), and is scheduled to open at the end of 2006. The additional 19 properties will come on line by 2010. To address the identified regional market need for value hotel accommodation, particularly for business travel, the development of the Express by Holiday Inn brand will see properties located within commercial centres, along major road arteries and in around business and industrial parks in citys across the region. “There is a need for this type of internationally branded three star hotels that provide quality service at value for money,” explained Chris Moloney, chief operating officer, InterContinental Hotels Group, Middle East and Africa. “We have made a commitment to the GCC market and have the ability to respond to either owner’s or customer’s demands. This is why we looked for partners that really understood what the brand is about.”

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