Britain’s IHG to double Middle East hotels on budget boom

Hotel chain aims to capitalise on demand for no-frills travel in region, says president
Britain’s IHG to double Middle East hotels on budget boom
IHG predicts an emerging mass market for budget travel in the Middle East
By Shane McGinley
Wed 04 May 2011 11:45 AM

UK
hotel chain InterContinental Hotels Group (IHG) plans to double the number of
hotels it operates in the Middle East in the next 10 years, the company said.

“We’re
the largest hotel company in this patch and we’d like to remain that way. We
would expect that we would double our presence here over the next seven to ten
years,” Kirk Kinsell, president for Europe, Middle East & Africa, told
Arabian Business.

The
company, whose brands include Crowne Plaza and Holiday Inn Express, operates 74
properties across the region and counts Saudi Arabia as its largest market.

Its
expansion plan hopes to capitalise on rising demand for high-quality budget
hotels across the Middle East region, said Kinsell.

“What
we are seeing emerge across Dubai and the Middle East is a mass market. Not
everybody is comfortable staying in a luxury resort, walking through a lobby
and being dressed to the nines.

“You
have a more fluid middle class and people in that category want to travel as
well. I think there is a bright future in this part of the world for a mass
market product,” he said.

The rapid growth of mid-range hotels in the region is set
to mirror Europe’s budget hotel growth two decades years ago, consultancy firm
Jones Lang LaSalle said Sunday. Low-cost properties are set to open in
industrial centres and smaller cities as demand from cost-conscious business
travellers increase.

For
hoteliers, budget-priced properties offer a better return on investment,
Kinsell said.

“To
build a five-star property is very expensive. To build a Holiday Inn or a Holiday
Inn Express is a lot less so,” he said. “The risk on return on investment over
time is much less and you can do more of them, so you can spread your risk, as
opposed to a single asset property.”

IHG
this year rolled out a $1bn revamp of its Holiday Inn and Holiday Inn Express
brands and said its Crown Plaza brand would also be overhauled.

Royal
Bank of Scotland warned in a research note the brand revamp could see up to a
tenth of Crown Plaza properties dropped from IHG’s portfolio, but Kinsell said
the overhaul would be unlikely to affect the 18 hotels in the Middle East.

“The
challenge for Crowne Plaza is more of a US challenge than it is a global
challenge. It certainly isn’t for the Middle East or Asia or China,” Kinsell
said.

IHG
reported a 5.9 percent rise in revenues in 2010.

For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.