BULLETINHOTELIER MIDDLE EAST | May 2019 | Volume 18 Issue 05 13
INSIGHT UAE hotels are among the ‘highest profitability levels in the world’,
with hotel food and beverage demand underpinning profits, according to
managing director of STR Robin Rossmann, who leads global operations
except in North America.
Speaking exclusively to Hotelier at the Arabian Hotel Investment
Conference in Ras Al Khaimah, UAE, Rossmann said that one of the
ultimate elements underpinning investment in hotels across the region
is that they are among the highest profitability levels in the world. He
revealed that one of the elements underpinning is the strength of hotels
in terms of food and beverage.
“This is because they [hotels] are already the epicentre of demand for
local communities and for tourists, especially for western cultures that
want to have alcohol and the only place you can do that is in hotels. It
creates a lot of demand and it is profitable demand,” he said.
He went on to highlight how food and beverage offerings in hotels in
the UAE generate profit margins of around 40%, compared to New York
where profit margins are 0%, Paris at about 6%, and London at 25-30%,
due to the higher labour costs and lower demand in the latter three cities.
Speaking about hotel profits in the region, he said that historically
the region, and Dubai particularly, has had incrediblly high levels that
are unattainable anywhere else. “They [profit levels] have come down
now,” he said, “and obviously hoteliers are not going to be happy about
that. However when you benchmark that on a global scale, returns are
still pretty good here.”
Speaking about the future of the region’s hotel sector, Rossmann said that
because supply is increasing, a lot will depend on the ability of the region to
continue to grow demand. “It has got the levers to do that,” he said, “but that
doesn’t mean it will be easy. It will get bumpy; there will be years when there
will be declines, and we expect 2019 is going to be a tough year.”
He pointed out, however, that ultimately, hotels are long term
investments, over a period of 25-50 years. “You have to take a view
on your belief in your destination as a whole and ultimately travel and
tourism is a very strong and growing industry globally. If this region can
do what it needs to do to attract those travellers then it is difficult to bet
against,” he said.OPENINGS Accor has reportedly revealed extensive expansion plans
across Africa, with Egypt being a primary area for openings over
the next two years.
The hotel operator said they plan to open 30 hotels across Egypt
as part of a “rebound” following external factors impacting the
industry such as the terrorist attack at an Egyptian resort in Sharm
El Sheikh in 2015.
According to news publication Bloomberg, Accor’s chief
executive officer for the Middle East and Africa, Mark Willis, said
Egypt was resurrecting after 10 years of a “tough situation”, but is
now improving.
“Egypt has overtaken Kenya’s coastal region as the preferred
destination for European tourists and investors. Revenue per
available Accor room has risen 20% year-on-year,” said Willis.
Accor has 143 hotels in Africa and is set to promote its
Movenpick brand in the region.
The hotel group will fund the growth with more than $1 billion
from the Katara Hospitality Fund set up last year for sub-Saharan
Africa. Accor is so far the main investor with $500 million.UAE hotels among the ‘highest profi tability levels in the world’
Hotel food and beverage demand underpinning profi ts, says STR global managing director
Egypt is among several other African markets that Accor is targeting for hotel openings
UAE hotels generate profit margins of around 40%Accor to open 30 hotels in Egypt
Egypt has taken over Kenya as the preferred desitination for Europeans