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Wed 5 May 2010 02:44 PM

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Starwood boss blames tight credit for hotel delays

EXCLUSIVE: Hotel operator says partnership struggled to seal financing.

Starwood boss blames tight credit for hotel delays
ESTABLISHED: Starwood operates 50 hotels in the Middle East, including the 5-star Westin in Dubai.

The regional boss of hotel chain Starwood Hotels & Resorts has blamed funding difficulties for ongoing delays to two of its branded hotel openings in Dubai.

The luxury outlet Dubai W had been scheduled to open in 2008, in partnership with local developer Al-Futtaim Group, while the St Regis Hotel & Residences Business Bay, which is backed by developer ETA Star, was expected to open its doors in 2012.

The Dubai W has yet to be built, although piling work has been completed, while ETA Star has still not broken ground on the St Regis project.

Guido de Wilde, vice president of Starwood Middle East, said work had stuttered when both developers struggled to seal financing deals in the tightened debt markets.

“[The Dubai W] is a funding issue, but I think [Al-Futtaim Group] is sorting it out,” de Wilde told Arabian Business. “It’s not indefinitely suspended but the project is on hold. I don’t know when it will open.”

Starwood, which operates 50 hotels in the Middle East, 25 of which are in the UAE, had signed contracts to manage both outlets.

“We’re meeting on a regular basis, piling has been done, the design is fully finished – they could start building tomorrow,” de Wilde said. “They’ve invested a lot of money, so I can’t imagine they would just let it sit there.”

ETA Star has also struggled to secure funding, de Wilde said; partly because the St Regis project features a real estate element in the form of 80 branded residential apartments.

Dubai’s property market was badly hit by the global downturn, with an estimated $100bn wiped off the city’s developed real estate assets.

“The St Regis hotel is exactly the same story [as Al-Futtaim], only ground has not been broken – we’re just waiting to see what will happen,” de Wilde said. “That project had a real estate element to it – of serviced apartments. They were branded residential apartments. Now, we know the whole real estate market was very badly hit last year.”

Starwood remains confident that both hotels will eventually open, de Wilde said, but was unable to give a timeframe for their construction.

“At times like this, you just have to trust your partner, that he’s going to make it happen. But you give him the time that he requires. I just can’t put a time on it.”

W and St Regis are two of nine hotel brands owned by Starwood, which includes Sheraton, Le Meridien and Westin in its portfolio.

The chain currently has 20 hotel openings in the pipeline for the Middle East, with a further 20 likely in the next three years, de Wilde said. The eighth largest hotel operator in the world, Starwood expects to open seven hotels regionally next year, three of which will be in Abu Dhabi, to include the W Abu Dhabi.

“By 2013 we will have 70 hotels in operation – that is realistic. In the meantime, we are negotiating new contracts. Could we have 80, 90 hotels in five years? Possibly.”

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