LIFT attended the Arabian Hotel Investment Conference (AHIC) in Dubai last week. AHIC is a great event, bringing together investors from across the Middle East and North Africa (MENA) and attracting hospitality brands from around the globe. Admittedly, we did not know what to expect from this year’s conference. The backdrop of course is the wave of political and social unrest which has swept across much of the region. While Gulf states with the notable exception of Bahrain have remained stable, markets like Dubai and Abu Dhabi are contending with significant increases in hotel and residential supply. STR Global sees another 25,000 hotel units coming on-line in Dubai, and more than 14,000 in the pipeline in Abu Dhabi.
Nevertheless, sentiment at the conference was decidedly upbeat. Clearly, markets like Dubai, Doha and Abu Dhabi are benefitting from a perceived safe haven status, as consumers and investors place a premium on stability. Occupancy in Dubai was in excess of 80% in Q1 and a 7% increase in REVPAR was recorded over the same period (STR Global). The good news extended beyond the performance of operational hotel assets. There were reports of Dubai projects receiving new rounds of financing in international markets for the first time sense the credit crisis set in, although it is worth noting that domestic lending remains very restricted.
Most encouragingly from a LIFT perspective was the clear evidence we saw that asset owners and investors are driving innovation in response to the continued softness of residential markets. We talked to owners who are converting portions of residential inventory into serviced apartment products and looking to build rental distribution in order to drive income until residential markets recover. A number of owners are also considering conversion of hotel or residential inventory into shared ownership products (vacation ownership / timeshare, fractional or private residence clubs). It is an exciting time for LIFT, as we specialize in developing and executing the solutions today’s market is looking for.
Next on the LIFT blog we will explore opportunities for luxury brand extensions in some of Asia’s most exciting residential markets.
