A new firm, Ishraaq
, has been created to launch the hotels outside Saudi Arabia. The company, in which Dubai International Capital
, the investment arm of Dubai Holding
,holds a 46 per cent stake, will roll out properties in Bahrain, Oman, Kuwait, Qatar and the UAE over the next five-seven years.
Bahrain-based ADDAX Investment Bank
was mandated to arrange the $200 million financing package. About $80 million of equity will be provided, with the balance coming in debt. ADDAX will also hold a 10 per cent stake in the owning company, with the remainder split among 10 private regional investors.
Ishraaq plans to build as many as 10 hotels in Dubai, with negotiations already under way with Dubai Holding for five plots. The first two are likely to be in Knowledge Village and a location near Dubai International Airport. Three more are earmarked for Business Bay, International Media Production Zone (IMPZ) and Dubai Studio City. The hotels will each have about 180 rooms.
Hospitality Management Services (HMS)
, an affiliate of Dubai-based RSP Group
, is acting as development manager and will operate the hotels across the region. The properties will be a franchise of US-based Intercontinental Hotel Group (IHG)
The client is hoping to award several contracts by the end of July with a view to appointing a local and international project manager, an architect, an engineering consultant and a procurement agent. Construction of the first properties in Dubai will be completed in 2006.
For the Saudi Arabian element of the programme, costing an estimated $200 million, Saudi Real Estate Development Company (SREDCO)
is the investor. The company is in final negotiations with an unidentified US firm for the project management contract. Construction is scheduled to begin by the end of the year on one hotel each in Riyadh and Jeddah.
The launch of the Holiday Inn Express brand across the Gulf marks the first step in the region to diversify its hotel product. With tourist arrivals in the Middle East reaching about 35 million in 2004, up 20.7 per cent from 29 million in 2003, the region has seen a growing shortage of quality affordable accommodation.