Fairmont to triple Mideast hotel portfolio

Source:  www.business.maktoob.com 

DUBAI – Fairmont plans to almost triple its number of hotels in the Middle East by 2015 as the region becomes its main focus for expansion after Qatar bought a 40 percent stake in its parent company, a senior executive said on Tuesday.

The Canadian hotelier is looking to open at least 14 hotels over the next five years and is bullish on the outlook for the hospitality market in the region, said Kent Cooper, regional sales vice president at Fairmont.

He said the hotels are a mixture of projects already under construction and ones yet to be announced.

“The Middle East is our primary focus of development. I think with our strategic partnership with Qatari Diar, it is natural,” Cooper told reporters at a media briefing.

Fairmont Raffles said last week it would sell new shares equivalent to 40 percent of its capital to Qatari Diar, owned the Qatar Investment Authority, as part of a $847 million deal to fund global expansion.

The deal means Kingdom Holding, owned by Saudi prince Alwaleed bin Talal, will see its stake in the hotelier diluted to 35 percent from 58 percent.

“With this deal we are looking to become a global player in operating luxury hotels,” Cooper said.

Fairmont currently operates 55 hotels worldwide, but more than half of these are located in the United States and Canada.

The hotelier is looking to ramp up its presence outside North America to capitalise on high-growth emerging markets, as it plays catch up with the likes of Four Seasons, Sheraton and Ritz-Carlton.

Fairmont has five hotels in the Middle East – in Egypt and the UAE – and plans to open further hotels in the Gulf, Egypt and Morocco, with a particular focus on Saudi Arabia.

“Saudi Arabia has to be our number one market for future developments,” he said.

Fairmont in July will open the Makkah Clock Royal Tower hotel, part of seven-tower Abraj Al Bait complex under construction in Mecca to serve the growing number of Muslim pilgrims visiting the holy city.

At 577 metres high the Makkah Clock Royal Tower will be the second tallest building in the world behind Dubai’s Burj Khalifa. It will feature a 40 metre clock, visible from 17 km away, which will announce daily prayers.

Saudi Arabia is investing billions in its tourism industry as it looks to diversify its economy away from hydrocarbons. The government plans to attract 88 million tourists and generate more than 100 billion riyals ($27 billion) in tourism revenue by 2020.

Cooper said he is seeing signs of recovery in the Middle East hospitality sector after a dismal 2009 which saw revenues and occupancy plunge amid the global travel downturn.

“The market is coming back quicker than we thought,” he said, without going into further detail.

Middle East hotels saw revenues and occupancy increase in February, with revenue per available room (RevPAR) recording its first positive growth since the second half of 2008, according to hospitality research firm STR Global.

For the whole of 2009 occupancy in the Middle East dropped 10.9 percent to 62.0 percent compared to the previous year, while RevPar fell by 13.3 percent to $95.44, STR Global figures show.