A view from AHIC
Bench events chairman Jonathan Worsley reviews AHIC
Bench events chairman Jonathan Worsley reports from the Arabian Hotel Investment Conference
In the wake of the Arabian Hotel Investment Conference (AHIC), I am left contemplating how things have changed in a year. With AHIC 2010 now behind us and after listening to three days of high level debate and insight from industry leaders, I am pleased to say that I am somewhat optimistic about the state of the market and excited to see where the next 12 months will take us.
I’m not going to lie, going into this year’s conference, I was nervous. During the last 12 months, we have seen some of the toughest market conditions ever experienced in the region. With such a strong speaker line-up in place, I was not concerned about the quality of AHIC, I was worried that the tone and message would be somewhat downbeat. My fears proved to be unfounded, although far from the giddy rhetoric of 2008, there was a positive and healthy dialogue, as our opening keynote speaker, Nenad Pacek of Global Success Advisors, assured us, “looking forward, the outlook for MENA is markedly better than 2009. The region is likely to grow 4.4% this year and 4.6% in 2011”. This places MENA as the second-fastest growing region of the world, outperforming the developed world on aggregate, which is excellent news for those of us active in region.
Pacek also highlighted some interesting mega-trends that will impact international business over the next decade:
1. Age of economic moderation
2. Rise of emerging markets and relative decline of the developed world
3. Sales growth will be largely in emerging markets
4. Competitive landscape will be tighter than ever
5. Age of relentless innovation – with external and internal focus
Pacek commented: “Whilst MENA sits in a good position on the global economic map, emerging markets will face more competition and slower growth. Ground-level intelligence and innovation is critical and companies will need to be closer to their clients”.
I sat through most sessions but Alex Kyriakidis of Deloitte moderated a particularly memorable panel, demonstrating the new remit of MENA’s hotel investors in the post economic – crisis world. As summarised by HH Sheikh Mubarak Abdullah Al Mubarak Al Sabah, chairman of Action Hotels, “today it must be about return on equity not return on ego”. Indeed a great deal of dialogue revolved around the importance of efficiency in both operations and build to ensure a sustainable return on investment.
The geographic split of AHIC attendees (600+ delegates in total) over previous years is reflective, I believe, in the shift to serious investors who are looking at the long-term potential of the region. Attendance by delegates from the UK was down 35% on 2009, whilst from Saudi Arabia there was a 40% growth. The gap left by European attendees was filled by new attendees based in MENA. As the regional hotel investment market has matured, we are seeing strong regional players leading the industry forward. Contributions from the likes of HE Saif Mohamed Al Hajeri, chairman of Abu Dhabi National Hotels; Sheikh Sultan Bin Tahnoon Al Nahyan, chairman, TDIC & chairman, Abu Dhabi Tourism Authority and Sheikh Mubarak, as mentioned earlier, left no doubt as to the presence of visionaries with a clear direction for development in the region.
John Defterios of CNN Marketplace Middle East was back with us again and wisely said “co-operation is the new destination discussion” and moderated a distinguished panel including HE Dr Rajiha Abdul Ameer Ali, Minister of Tourism for the Sultanate of Oman; HE Yassir Zenagui, Minister of Tourism & Handicraft for the Kingdom of Morocco and Dr Salah K AlBukkayet, Vice President Investment for the Saudi Commission for Tourism and Antiquities. It was illuminating to hear from those shaping the regulatory environment in which many of us are investing and operating. The importance of government involvement in securing the success of a destination came across in many panels, particularly in discussions relating to The Levant.
No wrap-up of AHIC would be complete without a nod to the outstanding receptions hosted by the Jumeirah Group and Emaar Hospitality. Both generated a buzz with Emaar showing off the sleek Armani Hotel, and Jumeirah changing its ballroom to a white wonderland.
With a successful AHIC behind me, I now am off (volcanic ash allowing!) to Lausanne, where we are running the advisory board meeting for the 14th annual International Hotel Investment Forum to be held next March in Berlin. As the event focuses on Europe, I am bracing myself for a much more sombre few days. Although as I have learnt, a lot can change in a relatively short space of time —here’s hoping!
ACCORDING TO THE EXPERTS…
AHIC on investors
“Investors holding — or wanting to hold — hospitality assets must look very carefully at the market relevance and sustainable return of the asset and not just to the short-term gain from operations.”
Siegfried Nierhaus, Atlas Hospitality
“Don’t go into a ‘tax incentive’ market expecting occupancy success.”
Christian Karaoglanian, Accor Hospitality
AHIC on the operator – owner dynamic
“The average management contact lasts longer than a marriage….”
Selim El Zyr, Rotana
“It’s high time the operators (international flags) put something back into the markets in which they ‘play’….they should contribute to destination marketing, not leaving inbound feed to the tourism offices and airlines….”
Mike Scully, Seven Tides
AHIC on demand generation
“Build it and they will stay….(meaning, build the KSA tourism infrastructure, and Saudi nationals will ‘holiday’ within the Kingdom)”
Dr Salah AlBukkayet, SCTA
“The Levant needs ‘one destination’ promotion and fluidity more than any other cluster….”
Bani Haddad, Wyndham Hotel Group
AHIC on the diversification debate
“Budget hotels is the way to go….you can’t double the (occupancy) numbers at a $250 room rate any more…”
Christian Karaoglanian, Accor Hospitality
“Luxury isn’t going anywhere but here to stay – 70% of new development is in luxury…”
Roeland Vos, Starwood Hotels & Resorts Worldwide
“All supply channels from architects, interior designers, contractors and so on, must understand the ‘cost engineering’ of the mid-scale segment…”
Sheikh Mubarak AM Al Sabah, Action Hotels