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Why hotels have high hopes for the Middle East

Saudi Arabia and the United Arab Emirates offer large markets, while Egypt struggles.

Abu dhabi hotel1Enlarge
Tourists sunbath along the beach at the St. Regis hotel located in the Saadiyat district, an Island off the city of Abu Dhabi on June 7, 2012. (Marwan Naamani/AFP/Getty Images)

Global hotel brands' aggressive expansion in the Arabian Gulf is helping to drive profits in the face of Europe's faltering economy and partially offset lackluster markets hit by the Arab uprisings, the CEOs of some of the world's biggest hotel groups told CNBC.

"There's no question that we have put a lot of resources behind China, India, and the Middle East," Richard Solomons, CEO of InterContinental Hotels Group, the world's largest hotel group by rooms, told CNBC's "Access: Middle East".

"The United Arab Emirates (UAE) and Saudi Arabia…are really the big two drivers for us, particularly with some other issues in markets such as Egypt," he said, speaking on the side lines of the 13th World Travel and Tourism Council summit in Abu Dhabi.

With 15 million visitors seen by 2015 in Dubai alone, its clout as an international tourist destination is growing.

Arne Sorenson, CEO of Marriott International, said he saw an attractive level of robustness in the markets of the UAE.

"You've got tremendous financial and cultural resources that can be brought to bear. And countries which are deliberate about growing arrivals in those places and growing commerce in those markets - that's what brings us opportunity," he said.

Tom Klein is president of Sabre Holdings, a travel technology company behind some of the industry's most advanced booking, hotel and flight management portals. He said that thus far, the UAE - and in particular Dubai - had outperformed others in the region.

"Because of their investment in tourism and the way they think about tourism as the engine for the region - while it's not completely unique to the Middle East, it's probably the shining example that the rest of the globe knows about," he said.

Darren Huston, CEO of Booking.com, added: "We're seeing great growth in this part of the world. In the Middle East the top three destinations for us are Dubai, Mecca and Abu Dhabi."

Along with a growing retail space, Dubai is home to the highest number of consumer brands - second only to London - according to property specialist CBRD.

But although it boasts the largest total tourism receipts in the region, it is Saudi Arabia that currently has the biggest hospitality market, with plenty of untapped potential.

According to the UNWTO Tourism Barometer, the Kingdom's tourist numbers grew by 14 percent in 2012, underpinned by strong demand for its religious sites.

Although for hotel businesses in the world's largest oil exporter, the ball is in the court of the authorities.

"You look at Medina and Mecca particularly - these are the markets that you know it's up to the Kingdom how many people they will let come in and visit these places," Sorenson said.

Egypt Still Struggling

The situation is radically different in Egypt, formerly the tourism industry's poster child for success and dynamism.

Hotel groups have been scrambling to deal with the slump in visitor traffic from the 14 million arrivals in the year before the revolution.

"We've seen business fall significantly, obviously, but it's coming back this year. Even this year it's performing better that I would have feared," Sorenson said.

Meanwhile, Solomons stressed that Egypt remained part of rival IHG's long-term regional strategy.

"Tourism has been a very big piece of development in Egypt and it will come back," he said.

"So the way you tackle it is: this is a long term business. You stay true to the business and you look after your people."

But for the remainder of Africa, Solomons disagreed with some of the bullishness expressed by industry experts.

"Maybe some of the people that are a little bit behind in some of the markets are looking to Africa to save them on that front. And I don't think it will, in the short term," he said.

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Original Source URL: 
www.cnbc.com/id/100730696

http://www.globalpost.com/dispatch/news/business/emerging-markets/130513/middle-east-hotels-tourism