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Wed 25 Jul 2012 03:52 PM

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Jan’s Smitten with MENA

With 11 MENA openings planned over the next 18 months, IHG CEO for Asia, Middle East and Africa Jan Smits updates Hotelier on the group’s regional expansion strategy

Jan’s Smitten with MENA
InterContinental Hotels Group’s chief executive officer for Asia, the Middle East and Africa Jan Smits

In less than 18 months from now, InterContinental Hotels Group (IHG) will have expanded its Middle East and North Africa (MENA) portfolio by a further 11 hotels, according to CEO for Asia, Middle East and Africa Jan Smits.

Over the next three years, this number of new properties in MENA continues to grow, reveals Smits, who gave Hotelier Middle East an update at the Arabian Hotel Investment Conference in Dubai.

Smits was speaking upon the launch of the InterContinental Muscat Hills Resort in Oman. When it opens in 2015, the project will be IHG’s second hotel resort development to include an IHG-run golf club component, after it took over Al Badia Golf Club operations next door to InterContinental Dubai Festival City back in 2009.

“It’s not a model we necessarily look for but it makes sense. You get a lot of synergy in running both [the hotel and the golf club], but we’re not experts in running golf courses,” explains Smits.

In the shorter term, IHG is on track to launch two hotels in Oman by the end of 2013: the 188-key Holiday Inn Muscat Airport — pushed back from its scheduled 2012 opening — and the 213-room Crowne Plaza Duqum.

IHG had previously launched the InterContinental Blue City Beach Resort, set to open in 2015, however, this forms part of the stalled Blue City real estate development.

The firm currently operates only one InterContinental resort and three Crowne Plazas in Oman, a country that Smits explains has a “lot of potential” for the group.

Bahrain boomerang

In Bahrain the outlook is also positive, according to Smits. In spite of recent unrest, the group is forging ahead with developments there, and he confirmed that the Holiday Inn Express Bahrain, in Manama, will open this year.

The group also has two upcoming properties in Al Seef — Staybridge Suites Bahrain Al Seef and Holiday Inn Bahrain Al Seef — which Smits said were continuing in line with the scheduled 2014 launch. IHGs existing hotels in Bahrain are continuing to operate, albeit with lower occupancies and rates.

“The hotel industry’s a very cyclical business. There are cycles; be it political unrest, downturns, natural disasters — different markets are at different stages. Some markets in this part of the world are going through a difficult patch,” comments Smits.

“We’re operating the Bahrain hotels and we continue to support our operations with the owner. Our main aim is to be close to the owner and look after our guests and employees,’ he tells Hotelier.

Time is right in KSA

Meanwhile in Saudi Arabia, the group’s expansion strategy is all about timing.

“Eventually, in Saudi Arabia, we will deploy all of our brands, but first you’ve got to make sure you’ve got enough Holiday Inns, Crowne Plazas and InterContinentals [all brands already present in the KSA market] before you do anything else,” explains Smits.

“In India for example we had a joint venture agreement, putting our own money in, to add 3000 Holiday Inn Express rooms to the market — so it needs to be done strategically — do a few at a time,” he continues.

This year, IHG will open its 502-room Crowne Plaza Madinah, followed by the launch of the 326-key Crowne Plaza Riyadh — ITCC and the 283-room Holiday Inn Riyadh Meydan before the end of the year.

“Saudi Arabia has great potential, we’ve been there since the ’70s; we’ve got 22 hotels [comprising 5000 rooms] there and nine hotels [comprising 2700 rooms] in the pipeline to open in the next three to five years, so it is a great story. There is strong RevPAR and GDP growth and the government is investing in infrastructure,” says Smits.

In March, IHG announced two projects in Riyadh’s King Abdullah Financial District comprising the group’s second InterContinental-branded hotel in the city, and the region’s first Indigo project, which is due to open in 2015.

Speaking at the time, Smits said Saudi Arabia was “critical” to the group’s success in the region.

He told Hotelier that he is most excited about the launch of the Indigo Riyadh KAFD.

IHG has 38 of its boutique-style Hotel Indigo-branded properties globally, with around 60 in the worldwide pipeline, but none currently operating within Smits’ remit.

“In my whole region I haven’t got one Indigo open yet. We’ve got one in Greater China — the first one I open will be in Bangkok next year — Riyadh will be the next. It’s definitely a brand we look to grow. Once it is open and someone can see it, that’s when it escalates.”

In October 2011, Karin Sheppard, IHG’s senior vice president for sales and marketing – Asia, Middle East & Africa told Hotelier Middle East the group had earmarked 10 of the 60 pipeline properties for the Middle East, including hotels in Saudi Arabia and the UAE.

Doha dreaming

Smits would also like to see the Indigo brand brought to Doha, he reveals: “An indigo would be great there, that would be a good place for Indigo”

But, for the time being, the group is more concerned with establishing the new InterContinental Doha The City — amid a flurry of other hotel openings in Doha from its competitors — as well as the forthcoming launch of the 378-key Crowne Plaza Doha The Business Park, which is due to open its doors in quarter four.

On top of those already mentioned, IHG will open hotels in Jordan, Kuwait, Lebanon and the UAE within the next 18 months.

The 420-key Crowne Plaza Dead Sea Resort & Spa is on track to open this year, according to the group. And the 204-room InterContinental Kuwait will open in 2013, along with two Staybridge Suites properties in Beirut and Ras Al Khaimah.

Asked about the challenges of overseeing such a large area, Smits says: “At the end of the day it’s about running your hotels well and delivering the brand promise and finding the right opportunities. There are lots around but not necessarily the right ones.”

Highlighting his priorities over the coming year, Smits explains: “I’d like to bring the Indigo brand to Doha and Dubai, grow Holiday Inn Express, and I’d like to get a stronger resorts portfolio.”

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