Should the GCC build more hospitality projects?
Experts say despite the challenging economic conditions in the GCC, the hospitality sector has a bright future due to the tourism-related ambitions of member states
In April 2016, Abu Dhabi-based developer Eagle Hills announced its first venture into the UAE, with the Address Hotel-branded resorts and serviced apartments in Fujairah. The project, to be built on 11ha of land, will contain an Address Hotel with 196 rooms, including a presidential suite and family suites; 10 five-bed villas overlooking a hotel plaza; and 177 serviced apartments – 102 two-bedroom, 60 three-bedroom and 12 four-bedroom units – spread over five low-rise blocks.
Another UAE-headquartered business conglomerate, Majid Al Futtaim, has announced plans to add six new hotels to its Mall of the Emirates and City Centre Mirdif malls, and in its planned mixed-use community in Dubai, bringing the total number of keys operated to 4,800.
In the hospitality sector, the UAE has the highest number of ongoing hotel projects in the Middle East and Africa region, followed by Saudi Arabia, Turkey and Morocco. TopHotelProjects, a provider of global hotel data, stated the UAE has 170 ongoing hotel projects, comprising 63,970 rooms.
Dubai accounted for 119 of these projects, and Abu Dhabi claimed 26. The study said Saudi Arabia has 126 projects with 48,256 rooms, while Turkey has 73 projects with 12,624 rooms.
According to Gulf News, 872 hotel projects are currently underway in the Middle East and Africa (MEA), set to add 243,036 rooms to the market over the coming years, the majority before 2020. In the Middle East, the research found that 546 projects with 166,036 rooms are underway, and 326 projects in Africa with 77,000 rooms.
Despite the boom in demand and supply for hotel rooms, different demographics across the MEA region pose several challenges while catering to the client needs. Considering the present market conditions, UAE-based contractor ALEC believes in adopting suitable strategies to minimise the risk on projects.
Kez Taylor, CEO of ALEC, says: “We carefully select which projects to target and which clients to work with. We are fortunate to have developed strong working relationships with the private and public developers over the years.
“Also, another key strategy is to work closely with key suppliers, preferred partners and sub-contractors who have experience working with us – we value our supply chain and, as such, we aim to ensure that even in the challenging economic climate, we ensure cash flow and payments are made on time wherever possible.”
ALEC has recently been awarded the contract for a four-star hotel, located in Dubai Festival City. Also, the fit-out division of ALEC was selected for the Waldorf Astoria at Dubai International Financial Centre (DIFC), where the scope of works includes fit-out, mechanical, electrical and plumbing (MEP) works, and furniture, fixtures and equipment (FF&E) from shell and core, for the 242 keys and 27 branded apartments in the five-star hotel.
Neighbouring Oman is also set for a significant boost in its hospitality sector in 2016, as major international hotel chains open their first – or new – properties. Senior figures from Oman’s Ministry of Tourism outlined the anticipated 2,000 new hotel rooms to open in the coming year during Arabian Travel Market 2016.
Oman-based architect and designer, kgdmt | architects + engineers, has worked on the five-star Alila Salalah resort (lead image) as its lead consultant and designer. The firm has also worked on a hotel in Al Hamra, near Nizwa in Oman. kgdmt’s civil and structural engineering division formed part of the design delivery team for the Louis Vuitton Hotel in Yitti, Muscat.
Ranjay Judge, the firm’s director, says: “We are currently working on the feasibility study of a tourist complex in Musandam, located in the northern annex of Oman.
“The biggest challenge in the sultanate is managing what the client wants and what the client wants to pay. We have been successful by providing design solutions that cleverly balance cost, time and quality of design. We try and steer clear of trends, look at each project individually, and try to find the best design solution that fits the project’s unique needs,” adds Judge.
Another trend worthy of note is that during recent years, Turkish companies have been investing millions of dollars in GCC real estate, primarily in the hospitality and residential sectors. Turkey-based architect Tabanlioglu, for example, is currently engaged in numerous hospitality projects in the UAE, Qatar, and Saudi Arabia. The company’s engagement ranges from early conceptualisation to construction-stage involvements in the projects.
One of Tabanlioglu’s UAE contracts is Crystal Towers, a five-star hotel, located in Dubai’s Jumeirah Beach Residences (JBR). The 410-key hotel is a part of a mixed-use complex, which features two towers and a podium. The other tower is residential, featuring 165 luxury apartments.
Work at the project is progressing well, but it hasn’t all been smooth sailing according to Melkan Gursel, an architect with the firm. She explains: “All projects have constraints; the only setback on this particular one has been the delay faced due to some unavoidable reasons.”
Despite the setbacks posed by challenging circumstances in different countries, the hospitality industry in the GCC is forecasted to grow from $22.8bn in 2013 to $35.9bn by 2018, at an annual rate of 9.5%, according to investment bank Alpen Capital.
Taylor from ALEC confidently concludes: “All the leading hospitality operators in the world have a presence in the GCC, and there is a strong appetite from local developers to build new hotels and resorts. With this in mind, we are confident that the hospitality segment will continue to perform strongly despite challenging market conditions.”