Deal Structured for 20 Gulf Hotels
A consortium of 12 investors are to finance the US$150 launch and development of more than 20 Express by Holiday Inn hotels across five countries in the Arab Gulf Cooperation Council (GCC). The owning company for the hotels, Ishraq, will control the rights to the three-star brand across the GCC, with the exception of Saudi Arabia.
Dubai International Capital (DIC), the international investment arm of Dubai Holding, is Ishraq’s anchor investor and the key player in the deal, which was structured, arranged and placed by Addax Investment Bank, the Middle East investment bank based in Bahrain.Ê
The 20 properties will be operated on behalf of Ishraq by Hospitality Management Services Middle East Ltd (HMS), the master franchise developer and operator of Express by Holiday Inn in the Gulf states. The first property will be built at Knowledge Village, part of the Dubai Technology and Media Free Zone (TECOM).
For DIC, the international investment arm of Dubai Holding, this is the fourth major strategic investment outside Dubai in recent months.
The company invested $1 billion in DaimlerChrysler, making it the company’s third largest shareholder, followed by the $1.5 billion acquisition of The Tussauds Group in the UK. DIC has also launched Jordan Dubai Capital, a $280 million investment company targeting opportunities in the Jordanian economy.
Sameer Al Ansari, CEO of DIC, said, “There is a huge gap in the market for branded budget hotels, which we believe are essential to maintain the target visitor figures for the next 10 years in the Gulf.
“This move really reflects the development of tourism in the Gulf which, to date, has concentrated on iconic world-class projects. We have traced the rise and profile of inbound tourists and have identified that the time is right to tap into the three-star market which is flourishing around the world.”
According to WTO figures, the Middle East will be the fastest-growing region by 2020, with estimated growth of 7.1% per annum, and 69 million tourists. 37% of these tourists are tipped to be intra-regional travellers, with 32% coming from Europe.
Thierry Loué, managing director of the operator HMS, said, “The move to market will be fast with the first hotels opening in Dubai at the end of 2006 and the rest of the hotels open by 2010.”
To address the identified regional market need for value hotel accommodation, particularly for business travel, the development of the Express by Holiday Inn brand will see properties located within commercial centres, along major road arteries and in around business and industrial parks.