Is it time for focused hotel developments?

Up until 10 years ago we shared very similar environments in the Gulf, our food is the same, our culture is the same, and our oil is the same. Then the Dubai project happened and opened our eyes to new sectors such as health care, education, sports, entertainment and more. People who target special locations for their facilities and services would always need a decent room to house them for a night or may be ten nights. Three players must coordinate to make such specialized hotel development success; the developer, the operator, and the location.

All real estate developers have one global goal they thrive to achieve which is making more money. Developers should invest more in market researches to better satisfy focused demand. Dubai for example is filled with resort and business hotels but have very few health care oriented hotels that cater for visiting patients and their families in Dubai Healthcare City. Hotel Developers have taken many steps to target focused customer groups by signing strategic management agreements with hotel operators to provide certain brands to the right markets. Al Hokair Group has signed an agreement with Hilton International to introduce the Hilton Garden Inn brand in the Kingdom to mainly target mall shoppers. Another focused hotel developer is Bu Khamseen Holding Group which owns the only branded hotel in Al-Sayeda Zainab City in Syria, The Safir Sayeda Zainab. The hotel mainly targets religious travelers seeking Al Sayeda Zainab shrine. The group is also the first international group to build a hotel in the holy city of Karbala which is most likely to be a Safir.

Customer are always looking for something familiar to relate to, and being in the Middle East customers would related strongly to a brand that respects the believes and culture of its guests. The majority of brands present in our countries are imported brands which lacks the identity to us, Muslims. On the other hand, local brands and local hotel developers have taken the initative to shape the local hotel industry by introducing Shaza Hotels and Rayhaan Hotels and Resorts by Rotana (alcohol free). Both brands can expand in uncharted markets especially Rayhaan which is a dry concept to the bone.

Saudi Arabia is a religious Destination, Doha is a sports destination, Dubai is a business destination, and Beirut is a holiday destination. Each destination has different hotel branding requirements. Each location has its different set of traveler profiles. Taking the holy city Mecca as an example, the city receives an average of two to three million Muslims during Al Hajj season only. Hotel developers can utilize the fact that there is a guaranteed minimum occupancy rates in the city therefore more hotels can be accommodated. Moreover, there are other destinations that can attract new hotels and developers but are still undiscovered. The holy city of Karabala and Al Najaf which both witness all year long massive religious traffic but they still lack the developers attention due to Iraq’s security issue. There is always room to expand successfully if brand and developer agree on the right piece of land.

Many destinations were mentioned in the above lines but not Kuwait. Kuwait lacks an identity that would motivate hotel developer to innovate. Kuwait has major hotel development companies that are introducing more and more new ideas to the regional market. IFA, NREC, United, and Tijaria are all companies that had tailored hotel projects for locations and visitors but have minimum participation in the local market. Companies and government should put their heads together to create a better Kuwait destination that can attract local investments first and then international.

By Ali Boshehry

Ali Boshehry has an extensive experience in dealing with financial data in many different fields that enabled him to be a dynamic part of the Global Markets Monitor team.