Non-US development spurs Fairmont growth

Fairmont Hotels and Resorts' portfolio growth is being driven largely by development outside the Americas, according to President Tom Storey.
Non-US development spurs Fairmont growth
By Administrator
Mon 16 Jun 2008 04:00 AM

Fairmont Hotels and Resorts' portfolio growth is being driven largely by development outside the Americas, according to President Tom Storey.

Storey said the company had witnessed some slowdown of US activity as a result of the current gloomy economic outlook.

"What we have seen in North America is fewer new developments and less trading of existing assets as people try to determine how to value those assets in the current credit environment," he said.

"But the majority of our growth is outside the Americas. At this point 70-80% of the projects are in other markets - in India, Asia and the Middle East.

"So it really hasn't slowed down our growth, it has just shifted our emphasis more towards the Middle East and Asia."

Storey added that new assets and new build properties were largely being presented by two different types of investors. "There are high net-worth individuals that see luxury hotels as an entry into the consumer market," he said.

"Many of them are in business-to-business types of operations, such as oil and gas or pharmaceuticals. Those individuals see luxury properties as a way to penetrate that market.

"There are also various governments and institutions that are looking to develop the infrastructure around a tourism development, whether that is the sovereign funds in the UAE, or the governments of India and China, for example.

But private equity groups, which have traditionally been aggressive in the real estate market, were slowing their activity, according to Storey.

"Private equity groups were essentially trading on existing assets to fund those acquisitions with inexpensive debt," he said. "Since that environment has changed they are now looking for different ways to participate in the underlying growth in the tourism sector.

Storey said the company's experience made it well placed to cater to the growing trend for mixed-use developments in the region.

"We are known for running large luxury complexes, and we are one of the few brands that can actually perform with those assets," he explained.

"Those assets require dealing with multiple business segments, such as business travellers, leisure travellers and high-end tourism.

"So typically, if there is a project that is greater than 300 or 350 keys that is going to be a luxury asset, we are almost always on the list of people to be talked to about managing that asset.

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