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Hotel Projects Worth $140b Ongoing in Gulf Countries

DUBAI — Arabian Gulf countries are currently constructing 306 new hotels, with 108,600 rooms worth in excess of $140 billion, according to a new study revealed on Sunday at The Hotel Show, a leading hospitality services trade show in Dubai.

The study by Proleads research house — Status of Developments in the Middle East Leisure Industry — is an up-to-date examination of hotel and leisure projects across the six countries of the Gulf Co-operation Council, or GCC. It was presented by Emil Rademeyer, Director of Proleads, at The Seven Star Conference, which is part of The Hotel Show.

Sultan bin Sulayem, Chairman of DP World, officially opened The Hotel Show 2009 on Sunday, at the Dubai World Trade Centre. The show, which hosts the latest products, services and technologies from all aspects of the hospitality and leisure sectors, runs 
until May 26. Exhibitors from 48 countries are participating at the show.

The Proleads report finds that hotel occupancy levels have remained relatively stable throughout the GCC since 2003 but it illustrates that the economic slowdown has impacted negatively on the region.

However, while acknowledging that 2009 will be a challenging year, it reveals that occupancy levels will pick up to 2008 levels by the end of 2010 and then accelerate with real growth by 2013.

“Given projected increases in demand from 2013 onwards, more hotels will be required if relatively high occupancy levels are to be maintained. Currently there are 306 hotel projects under construction budgeted at $140 billion. With an average completion period of two to three years 108,600 rooms should come online by 2011,” said Rademeyer.

“However, to satisfy the growing demand, the region will have to start constructing more hotels in 2010 to ensure they are ready in time to meet the growing demand. Therefore all things being equal, the study indicates that construction of hospitality projects will continue unabated.”

Proleads’ research also addressed the critical cash flow issues. “The economic slowdown has resulted in much more cash flowing out of the hotel construction sector than into it,” said Rademeyer. “This year, active cash flow is estimated to drop to below $20 billion. However, the industry is then projected to restore its ability to replace cash flow by late 2010 with more flowing into the industry than out of it by 2011.”

Welcoming the study, Maggie Moore, Exhibition Director of The Hotel Show, said: “While the regional hotel industry has undoubtedly been affected by the current global downturn, the good news is that the Middle East continues to invest heavily in the steady expansion of its hospitality industry. There are few regions in the world that can match this potential.”

Based in Dubai, Proleads focuses on construction markets across 20 countries in the Middle East, North Africa and Asia. The Proleads online database contains over 8,000 active projects with a total value of more than $6 trillion.

· business@khaleejtimes.com