Business slows

Kuwait’s tourism industry, and its hotels in particular, have been on a rollercoaster ride in recent years, as occupancies following the redevelopment of Iraq first peak and then start to fall

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By  Sarah Campbell Published  January 4, 2006

|~|SKCOMPLEXNIGHT.jpg|~|Sheraton Kuwait and Four Points by Sheraton.|~|Kuwait’s tourism industry has been riding on the wave of inbound travellers brought about by the Iraq conflict; but as things start to settle down next door, and as the world’s media look elsewhere for a headline, hotels across the country are watching occupancies slowly decline. According to the HVS International report, Middle East Hotel Markets — Outlooks Trends and Opportunities 2005, occupancy across the quality hotel market dropped from 84% in 2003 to 64% in 2004. The downward spiral, although less prominent, is expected to feature in most year-end figures for 2005 too. Yet, despite the slowdown, Kuwait’s government continues to push new hotel development. The government reportedly granted more than 80 licences for hotel developments in 2004, not including at least seven hotel projects currently under-construction or already in the pipeline. Meanwhile, plans to roll out a 20 year sustainable tourism plan remain on the shelf, leading current hotel managers to speculate on the long-term future of the country’s hospitality industry. “If there are no major changes then hotel businesses will be looking at a rather challenging near future,” admits Andreas Flückiger, general manager of the Radisson SAS Kuwait. “We are still waiting for the tourism masterplan for Kuwait to be revealed, which is currently under development. Once published, we will know better what to expect from the leisure sector in the future,” he adds. The 20-year tourism masterplan is being developed by Kuwait in co-ordination with the World Tourism Organisation and the United Nations Development Programme. The plan aims to encompass all areas of sustainable tourism development, including marketing, product development, training and environmental issues. However, the plan does not appear to have moved forward from its inception in early 2005. One government initiative that has come to fruition is the easing of visa restrictions, with 34 nationalities now able to get a visa on arrival at the airport. The easing of visa restrictions has been welcomed by all in the tourism industry, not least by hotel managers, who believe it will fuel an increase in international visitors. “Relaxed visa regulations, and the on-going projects, will put Kuwait in the limelight with regards to travel and tourism. The country is experiencing a steady growth rate in terms of international and regional tourists, and this growth is expected to be sustained as ambitious tourism projects come on stream,” says Daniel Ebo, director of sales for Hilton Kuwait Resort. New tourism projects include the development of Failaka Island, which lies 20 km east of Kuwait City. The island is currently owned by the government, but it has been earmarked for development. HVS International reports that the island is likely to be leased on a Build-Operate-Transfer (BOT) basis. The development will include various leisure and residential components. A second tourism project now confirmed is Bubiyan Island, which will include hotels, chalets and recreational facilities. While these projects await development, hotels continue to consolidate business and plan for the future. The Hilton Kuwait welcomed a new general manager, Andreas Bossard, in 2005, as well as refurbishing its Royal Villas with the latest Armani Casa furniture. The hotel is also expanding its MICE facilities. “Using our experience in organising conferences, meetings, and corporate and social events, we decided to expand the meeting space and are building a meeting room, plus converging two meeting rooms in favour of a larger space,” says Ebo. The Hilton Kuwait is the closest five-star hotel to the Iraq border, and as such has catered to a large number of business travellers dealing with the redevelopment of the country. While city-centre hotels may have witnessed a decline in business, Hilton recorded an 8% increase in profit for 2005 over 2004 figures. Occupancy also grew, topping 94.5% in 2005 versus 89.8% the year before. The Radisson SAS Hotel, located in Salmiya, tells a similar story. “Business was good and we ended up with 90% occupancy for 2005. This is in line with what we achieved in 2004 — at the same time we have been able to strengthen our position in a declining market,” says Flückiger. “Our main markets are Iraq-related businesses, local corporate business, embassies, and government business. Occasionally, [we receive] local leisure business,” he remarks. The Radisson SAS celebrated its 25th anniversary in 2005, proving that long-term business can be achieved in Kuwait. Kuwait City has seen a number of newcomers to the marketplace, including the Courtyard by Marriott and Four Points by Sheraton. The four-star Courtyard opened in early 2004, and it is already increasing its high-end accommodation inventory. “We have increased the number of our suites up to 16 units, all suites are appointed with quality amenities, high speed internet and the latest telephone and message system technology,” explains Thomas Buehner, country general manager for Marriott Hotels in Kuwait. “Both 2003 and 2004 in general were exceptional years for the hotel industry in Kuwait, while 2005 has seen a decline in business, mainly in city hotels. However, the last quarter of 2005 saw increased business demand. During the last quarter, the Courtyard led the market in terms of market share, and we see this trend continuing in 2006,” he continued. The Courtyard works closely in conjunction with its sister property, the five-star JW Marriott Kuwait City. A similar partnership exists between the Sheraton Kuwait and the Four Points by Sheraton. Both brands operate from the same location, offering complementary facilities. Recent developments at the Sheraton Kuwait include a rooms refurbishment, the addition of the French and Diplomatic Suites, and the renovation of the multi-purpose Al Dana Ballroom. The Mövenpick Hotel Kuwait, which opened in February 2003, it is also increasing its meetings facilities, and is currently building an extension. “Due to growing convention business, a hotel expansion is currently under construction. The convention centre will include two ballrooms in Kuwait, which can be divided into 10 meeting rooms,” says Mirvat Wehbe, public relations manager, Mövenpick Hotel Kuwait. Wehbe is confident that this extension is warranted. “I see a very bright future for Mövenpick Hotel Kuwait. We carefully analyse the market and design our products with accuracy and perfection. I am confident that Mövenpick Hotel Kuwait will attract customers from different parts of the world. At the end of the day, I can say that further achievements are on the way.” However, not all hoteliers in Kuwait are as ebullient about the future. Buehner from Marriott is cautious about the upcoming new hotels. “The increase in hotel choices in a city is usually a healthy sign. It is beneficial for both hotels and customers. While the last few years have seen an increase in supply of hotels in the city, it was not paralleled by a relative demand. We hope this situation will change in the near future,” he says.||**||

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