Hotel chains confirm GCC pipeline remains robust

Guy Wilkinson discusses the Gulf development pipeline

Opinion, Comment & analysis
A Luxury Collection Hotel - Ajman.
A Luxury Collection Hotel - Ajman.
Opinion, Comment & analysis
Opinion, Comment & analysis
Confirmed Future Chain Hotels in the GCC, 2010)
Confirmed Future Chain Hotels in the GCC, 2010)
Confirmed Future Chain Hotel Rooms in the GCC , 2010
Confirmed Future Chain Hotel Rooms in the GCC , 2010

Viability director Guy Wilkinson presents his research into the hotel development pipeline in the Gulf and provides some key insights into the chains that are leading the rest of the pack

As hoteliers at the sharp end of operations brace themselves for another challenging summer in many GCC locations, it may be a less than comforting thought to know that the ladies and gentlemen up at the head office responsible for development, in their wisdom, are still planning to launch an extraordinary number of new rooms in the region — just to add to the fun!

A new survey conducted by my firm Viability shows that the 2010 pipeline of confirmed new hotel rooms in the GCC is the second largest on record — and we have been doing this research for 12 years now.

We directly contacted some 80 hotel chains active in the GCC this year, of which 55 confirmed future GCC projects. The survey showed that 283 hotels with 83,604 rooms were officially planned as of May 2010, compared with 325 properties and 92,026 rooms last year, equivalent to reductions of 20% and 19% respectively. However, back in May 2008, at the peak of the real estate boom, we recorded 82,357 rooms in 295 hotels, and that in itself was a 10-year record. In other words, recession or no recession, the pipeline is still looking as strong as it ever was.

In total, 19 chains each declared more than 1000 rooms under development, compared to 23 in 2009 and 20 in 2008. Marriott topped the 2010 rankings for both hotels and rooms, with 29 properties and 9572 rooms planned bearing the Marriott, JW Marriott, Courtyard by Marriott, Renaissance and Ritz-Carton brands. In second place, Accor’s pipeline comprises 23 hotels with 6433 rooms under its Sofitel, Pullman, Novotel, Mercure and Ibis insignia. Other chains in the top 10 places reported pipelines of between 3000 and 5500 rooms.

Impact of the downturn

Although the survey totals have remained impressively constant over the past three years, the truth is that the last two would have been much higher if the recession had not intervened. In contrast to the 83,600 confirmed hotel rooms that are going ahead, there were more than 11,000 rooms that were declared ‘on hold’ with no firm recommencement date and a further 5400 rooms that had been cancelled altogether since the 2009 rankings. Another 10,000 rooms were put on hold and 9,000 rooms cancelled outright last year, meaning that altogether, more than 35,000 potential hotel rooms have been prevented from reaching fruition since the recession set in.

The current economic conditions have also caused the number of project delays to increase significantly since last year. Almost half (48%) of the confirmed hotels that were also contained in the 2009 research have been delayed by between one and four years, compared to 38% in 2009. These delays exclude any already reported last year, meaning that a number of projects have experienced several revisions of their programmes.

The most common reasons for these delays and cancellations include developers’ inability to obtain or maintain financing due to the current debt freeze, to overly optimistic balance sheet structures, or their need to allocate available funds to more pressing ventures. Many have had to sideline the hotel projects which were in poor locations — for example, on remote green field sites, in postponed mega projects or in the secondary and over-supplied markets.

More amazing projects still to come

Whether projects left over from the glory days of the boom, or others newly conceived since times got tough, expect to see some extraordinary hotels coming up between now and 2015.

Counter-intuitive though it may seem, but there are more confirmed ‘mega hotels’ than ever. No less than 35 or 12% of the 283 projects (which for the purposes of our survey includes project phases) comprise more than 500 letting units each. The biggest of them all is Fairmont’s upcoming 2775-unit combined property next to the Haram in Makkah, comprising the Makkah Royal Clock Tower, a Fairmont Hotel (1000 rooms, opening this year); the Raffles Makkah (205 rooms, 2010) and the Swissötel Makkah (no less than 1570 rooms, opening next year). Other large Fairmonts will open on The Palm in Dubai (877 units), in Manama (750), and Abu Dhabi (746).

Seasoned market pundits will be pleased to know that the former Bavaria Suites in Dubai, now rebranded as the Gloria Hotel Media City, will finally open the first of its two buildings later this year, with 1010 units. The second, 1090-unit building is scheduled to debut in 2011.

In Dubai, Marriott fought off stiff competition to bag the management of the wonderful twin-towers property near Business Bay to be known as the JW Marriott Marquis. It will open in two phases in 2011 and 2013 respectively, with 807 units in each phase. Marriott’s Ritz-Carlton brand is mainly known for its small, exclusive properties, but in the case of Riyadh, will open a large and exclusive hotel by 2014, with 1350 units. The upcoming JW Marriott in Abu Dhabi will have 669 units (2011).

Millennium is consolidating its presence in its home town of Abu Dhabi with no less than four towering, upscale properties: the 860-room Grand Millennium Al Wahda Tower, the 725-room Grand Millennium Capital Centre, the 638-room Bab Al Qasr and the 773-unit Grand Millennium Corniche.
Other sizeable pipeline hotels include the 850-unit Jumeirah Khor Dubai Hotel & Residences at Dubai Healthcare City, the 830-unit Hilton Riyadh Hotel & Residence, the 820-room Golden Tulip Dar El Hadith in Makkah, and the 792-unit Ramada Plaza & Conference Centre, also in Makkah.

New brands gear up for entry

A number of new-to-market brands also promise exciting products and services not hitherto experienced in the GCC. Hilton will be opening two hotels under its upscale Conrad brand, in Dubai (559 rooms, 2011) and Bahrain (300, 2012). The first Double Tree by Hilton will open in Al Khobar by 2012, with 304 rooms.

Soon to debut designer or boutique brands encompass Missoni from Rezidor, which will open properties in Kuwait and Sifah (half an hour down the coast from Muscat) in 2010 and 2014 respectively, the long-awaited W hotel which is apparently still planned at Dubai Festival City, the Palazzo Versace which will be opening this year at Dubai’s Culture Village, the Baccarat Hotel & Residence at the Dubai Pearl project (2014) and Hard Rock Hotels in Abu Dhabi and Dubai (both 2013).

Among the new luxury and upscale brands due to set out their wares are Best Western Premier, Cheval Blanc (Louis Vuitton’s new hotel brand), Grand Heritage, Hotel Le Bristol, Ramee Royal, Rixos (from Turkey), Regent (from Rezidor), Rocco Forte, Taj Mahal, Taj Exotica and Viceroy (from the US). At the mid-market level, Starwood is launching Element in Abu Dhabi, the Gulf Hotel has created the trendy K Hotel concept, Southern Sun will be debuting Sukoon (a dry brand) in Jeddah and Eva in Abu Dhabi, while Swiss-Belhotel will be opening its first local Swiss Inn in Dubai.


The addition of so many new hotel letting units will of course have a major impact in the GCC. Some markets will become oversupplied, and others even more so, with the expected consequences — diluted occupancies and even heavier downward pressure on room rates, including possible all-out rate wars.

Dubai is obviously already in this position, although since it is the region’s largest single hotel market, serving the highest volumes of visitors, new hotels there have an advantage over Abu Dhabi and Doha, for example, which are growing from a very low supply base, and hence may feel the impact of new rooms more intensely. Other markets have been largely immune from the effects of the recession, notably Riyadh, Jeddah and the Holy Cities, especially Makkah, where the expansion of the Haram and ever-growing Hajj trade is confidently expected to support the creation of more mega hotels. In terms of positioning, many feel that the luxury level has been more than well provided for, whereas the mid-market offers far better growth opportunities, especially in the Kingdom.

Interestingly, large global chains make the key distinction between markets that are generally oversupplied, as I described, with those that are or could become saturated just with their own brands. According to my discussions with regional development directors, few feel there is yet any danger of ‘cannibalising’ their existing hotels through additional growth, especially as many are introducing new brands with differentiated positioning to ensure this is does not happen.

Ranking Methodology

  • 12th continual year of survey.
  • All chains active in the GCC are canvassed directly.
  • Ranking based on numbers of rooms and suites only.
  • Ranking includes only chain hotel projects that are firmly committed.


  • All rumoured/ unsigned projects.
  • All projects for which opening dates have yet to be confirmed.
  • All single owner-operated properties.
  • All serviced and residential apartments, chalets and villas (but any true ‘all-suites’ hotels are included).

Guy Wilkinson is a partner of Viability, a specialist hotel and real estate consulting firm in Dubai. Email him at

For all the latest hospitality news from UAE, Gulf countries and around the world, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page.

Most Popular