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Budget market is next growth sector

Industry leaders set to debate the growing demand for mid-tier hotels

The Middle East hotel industry is set to see exponential growth in the budget sector in the years to come, according to global hotel groups, and economy lodging will be top of the agenda at this year’s Arabian Hotel Investment Conference.

According to Chris Moloney, regional chief operating officer for InterContinental Hotels Group, there is a huge gap in the market for branded budget hotels that, he believes, are essential to maintain visitor growth during the next 10 years in the Gulf.

“At InterContinental, we have traced the rise and profile of inbound tourists and noted the growth in the mid-scale segment in the GCC as well as a boom in pan-Arab tourism — this made us realise that it was viable for us to introduce Express by Holiday Inn to the Middle East to provide quality service with value for money,” Moloney said.

The first Express by Holiday Inn will open at Knowledge Village in Dubai next year with 240 rooms, and the group has plans for up to 20 properties in the Gulf, as well as a further 20 in Lebanon and Syria, an expansion plan mirrored by that of Centro by Rotana, the UAE hotel group’s new economy brand.

Rotana’s chief operating officer, Imad Elias, said the group had a target of 25 Centro properties across the region within two years, starting with two hotels in Dubai and one in Abu Dhabi opening in 2007.

“The average room rates across the region and specifically in key markets have been rising steadily but there are no branded three-star economy hotel chains operating across the Middle East,” he said.

Both operators agree that budget hotels in the region will adhere to different standards to those elsewhere.
“Express by Holiday Inn will be adapted according to market needs in the GCC, with properties including larger sized rooms, additional cupboard space, larger bathrooms, laundry service and high speed internet connections,” said Moloney.

Meanwhile, the Centro formula features rooms of 22m², all-day restaurant, bar, deli take-away shop, gym and pool, plus business and meeting facilities including wireless internet.

While the full service but low cost model is the route taken by some hotel operators, Accor has announced plans to add 20,000 new rooms over the next four years, of which half will be in the budget sector, several mavericks may revolutionise the low-cost hotel sector with radically different products.

Chairman of the Easy Group, Stelios Haji-Ioannou has announced he will launch his budget hotel concept in the Middle East, starting in Dubai in a bid to slash the cost of accommodation in the emirate. When negotiations are finalised, the low-cost franchise is expected to operate offering rooms as low as US $20 a night.

Meanwhile, the Kuwait-based IFA Hotels & Resorts has made a major investment in the small-capsule room style hotel brand, Yotel, with launch properties scheduled to open at Heathrow and Gatwick airports in the UK this summer.

The market for such facilities and potential for expansion is on the agenda at the second Arabian Hotel Investment Conference, taking place in Dubai this May.

Speaking at the session on economy lodging will be Easy Group’s Stelios Haji-Ioannou; Imad Elias from Rotana; Chris Moloney of InterContinental Hotels Group; Christophe Landais, regional managing director for Accor and Thierry Loue, managing partner of the RSP group.

The Arabian Hotel Investment Conference will run from April 29 - May 1, 2006 at Dubai’s Madinat Jumeirah conference centre.

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