Low-cost hotel operators line up

05 May 2006

With capacity in the five-star luxury hotel market set to soar over the coming five years, a host of new operators have announced plans to develop budget properties across the region. More than 50 three-star branded properties are set to enter the market over the coming years (see Cover Story).

Istithmar Hotels, a subsidiary of Dubai-based investment firm Istithmar, has signed a master franchise agreement with the UK's easyHotel. Under the deal, the company will invest $400 million to develop 38 easyHotel properties across 17 countries in the Middle East, North Africa and Indian subcontinent over five years. Some, particularly in India, will be converted buildings, although the majority will be new builds. The plans include six properties in Dubai, three in Saudi Arabia, two each in Egypt and Lebanon and one in almost every other Arab country.

'The size of the room will vary from country to country, but it's most likely the average in the region will be about 12 square metres,' Muneef Tarmoom, chief executive officer of Istithmar, told MEED on 30 April. 'Easy is honest about what it offers: small, very small and tiny.'

Kuwait's IFA Hotels & Resorts has launched the Yotel brand in conjunction with the UK's Yo!, founders of Yo! Sushi. The three-star product will be a hybrid of aircraft business-class cabins and a Japanese 'capsule' hotel. Yotel offers all the luxury trimmings, albeit on a smaller scale.

The group is negotiating for a number of sites in the Middle East and aims to open 20 Yotel formulas in the region over the next three-five years. The first is likely to be at Dubai airportMillennium Hotels & Resorts will operate a 100-room three-star Kingsgate in Abu Dhabi. It also said it would operate a 200-room serviced apartment building in the UAE capital. Abu Dhabi-based Rotana Group is pushing ahead with its new three-star Centro brand. The operator plans to open 25 properties across the Middle East within five years.

Its first 360-room property will be operational in Satwa, Dubai by the end of 2007, followed by a 264-room property in Al-Barsha and a 350-room hotel in Abu Dhabi. Other players include France's Accor, which will operate 14 Ibis hotels across the GCC and Levant by 2008/2009 and InterContinental Hotels Group (IHG), which plans to open 40 Express By Holiday Inn hotels across the region within five years.

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