BTN Exclusive: InterContinental Hotels Group Corners Regional Budget Market in The Middle East

14th May 2005

By Anna Gouldman

Following announcements that InterContinental will be the first hotel group to launch a budget brand into the Middle East, making its regional debut in Dubai, Jeddah and Riyadh by 2006, Breaking Travel News caught up with Chris Moloney, Chief Operating Officer, Middle East and Africa, InterContinental Hotels Group at Arabian Travel Market to talk about budget travel and hospitality trends.BTN: Can you comment on the importance of the Middle Eastern Market for InterContinental. Where do you see the most opportunity for the next six months and with which brands?

CM: The Middle East has always been extremely important for us. We’ve had a presence here for over 40 years with both the InterContinental and the Holiday Inn brands. We have currently 64 properties under management agreements and 40 under franchise so we have over 100 properties in the Middle East and Africa. The other thing we have here is great brand recognition and we demonstrate that by the size of our regional office. We are absolutely committed to this part of the world and we have the resources necessary to service this part of the world from Dubai.
BTN: Why did you decide to launch the budget brand Express by Holiday Inn here in Dubai and in the Middle East? Whilst we know that there is a worldwide trend for budget travel, is this likely to be mirrored in the Middle East, particularly in Dubai, where there is so much competition for luxury and extravagance?

CM: There are a couple of important issues here. Firstly within the GCC and the Middle East the largest inventory of hotel rooms is in fact the budget sector. It’s just that it’s not branded. Therefore there is never a consistency of product delivery or service delivery. So what we feel is important is to get this brand established and to get the brand distribution that is necessary to establish the brand rapidly. We felt that there is a market that has been under serviced here for many years - the budget sector.
The Express is about building the right sized property in the right location. With The Express, you don’t service a city - you service a sector. The Middle Class in the Middle East is expanding rapidly and there is a lot more road distribution than there used to be, so there is a lot more travel by car. That is a ... for the budget sector to travel. Therefore there is clearly a need for this brand

BTN: Why is there still a gap for budget travel in this marketplace?

CM: Initially in a market that’s developing, it always ends up at the high end. You first start developing the five star properties. As the market matures, then the budget sector comes in. If you look at Dubai, for example, there is no real property servicing Jebel Ali. Jebel Ali is a huge free zone and there is no branded property that is specifically servicing that area.
BTN: What kind of prices will the travellers be looking at within the budget sector?

CM: Between $80 - $100.
BTN: How important is it for the hospitality industry and the budget sector to embrace technology?

CM: It is absolutely critical to have the right type of technology and that is the other thing that we are going to provide in the budget sector - to make sure that we have the right technology to service that sector. The Internet today is like the telephone 10 years ago - it’s just an expected item. The other aspect that we need to develop with technology is to take the bureaucracy out of the guest experience. The way we are going to do that is through technology.
BTN: Can you comment on InterContinental’s decision to withdraw inventory through Expedia and

CM: We wanted to control everything and we wanted to make sure that our guests would be serviced properly and to make sure that there were no unexpected surprises so we felt that was an important issue to take control of.
BTN: There are rumours that InterContinental may sign a new partnership with a third party distributor. What will be your terms and conditions?

CM: There is an agreement there that has been established. We are in talks with a number of third party distributors. As long as we come to an agreement on how we will distribute we are happy to work with them.
BTN: Do you think other hotels will follow suit?

CM: They will. Absolutely.
BTN: IATA recently announced a move towards paperless ticketing by 2007, as well as more emphasis on implementing new technologies such as self-service kiosks. Do you think this will be mirrored in the hotel industry and how important is that service?

CM: I do believe strongly that we need to use technology to service the bureaucratic side of the hotel industry and so yes I do think that in time the traditional front desk will disappear and we will focus much more on service delivery than we will on the procedures that an individual experiences in a hotel stay.
BTN: Due to an increase in spending by female travellers, there is a growing trend for hotels to introduce facilities specifically aimed at executive female travellers. Just today, The Emirates Tower has launched a ladies only floor. Is there a need for this concept in the Middle East and will this spread internationally?

CM: I believe what is paramount to the individual female traveller in the Middle East is security. What we do in our hotels tends to look at where we are placing single women travellers so that they feel comfortable. Whether or not we would dedicate a floor - I don’t know if that is necessary, but special attention has to be paid - worldwide.
It is a growing segment and there are specific needs that need to be addressed.

BTN: Do you think this is specific to business travellers or any female travellers?

CM: It’s female travellers. It’s hard to distinguish now between business and leisure because more and more people are mixing the two.
BTN: During the AHIC Conference, it was suggested that with a quality spa in place, you can increase revenue by 30%. What are your thoughts on the growth of the spa market and the importance of offering spa facilities?

CM: I think that spas are very important, particularly to the leisure segment and particularly for the European and Asian and North American sector. You need to have a spa.
BTN: What is the most important thing to offer guests in their room?

CM: A quality bed.
BTN: What is the most important service to offer guests?

CM: I believe the most important thing to offer guests is to facilitate bureaucracy and to eliminate as much inconvenience of checking in and checking out and getting those individuals to a comfortable environment as quickly as possible. The most astounding service to provide is the unexpected.

BTN: How have you found this year’s Arabian Travel Market?

CM: This trade has just matured wonderfully. It is very well established. We are in a period of growth and development and there is a lot of business going on here so I think it has been very successful.



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