Comment: Hotel pipeline or pipe dream
Will properties finally start to come online, on time?
Obtaining pipeline data on the Middle East hotel industry is notoriously difficult, with developers slow to unveil management contracts and operators cautious of revealing opening dates.
The fears are well founded; every January, Hotelier Middle East presents the top 10 hotels forecast to open that year — based upon as close as we can get to a guarantee from the operator — and every December, we realise that sometimes up to half of those hotels are still under construction.
It’s embarrassing to admit, but it was in January 2010 when The Palazzo Versace Resort in Dubai was first included in this list. Four years on and the property has still not opened.
The global recession no doubt had an impact on progress and it reappeared in the 2011 list and received a brief mention in our 2012 industry forecast. At the end of 2012, there was still no news and now, while Versace CEO Gian Giacomo Ferraris says the hotel is scheduled to open this year, you can see why we are cautious of listing it.
Palazzo Versace is by no means alone when it comes to delays; Hilton Worldwide first announced a 2011 opening for Conrad Dubai, which finally opened a couple of months ago, and Rotana had planned to open its Salalah hotel in 2012, now scheduled for early 2014.
At the start of 2013, Fairmont Ajman, Adagio Fujairah Town Centre, Shangri-La Doha and Wyndham Grand Riyadh were all sure bets to open over the course of the year; none have and completion dates have been bumped to 2014, so keep your eyes peeled for those.
This year, we have published another broad selection of hero hotels expected to open within the next 12 months, from Four Seasons Dubai Jumeirah Beach to Anantara Doha, as well as our most comprehensive upcoming properties listing for 2014 and beyond yet.
On pages 52-56, the data provides some interesting insights into what appears to be an increasingly buoyant hotel pipeline for MEA. Just 12 months ago, we recorded 93 hotels in the pipeline for KSA. This year, there are 138 hotels underway, including 21 for Hilton Worldwide alone, an increase on 15 for the company last year.
With Saudi Arabia still ripe for development, this number seems only set to grow.
A similar vision is true in the UAE, with Dubai’s DTCM predicting that the current portfolio of around 82,000 rooms spread across 611 hotels and hotel apartments will need to double by 2020 to cope with the 25 million tourists predicted for Expo 2020. The tourism board’s data shows that there will be approximately 33 more hotels with 8500 more rooms added by the end of 2015. That still leaves room for another 73,500 hotel rooms!
Growth is also forecast in the capital, where TCA Abu Dhabi is seeking to grow its 24,000 rooms to 35,000 by the end of 2015, with then more to come.
So as we start another year, I am forced to ask; is this a hotel pipeline, or a pipe dream? Should the Palazzo Versace saga act as a warning to hotel developers and operators, or is this a faint smear on a rapidly developing market? And how many of this year’s top 10 hotels, presented on pages 48-51, do you think will actually open?