Business | Tourism
Credit crunch 'taking its toll on Middle East hotel industry'
The hotel sector in the Middle East expects to be hit significantly by the international financial turmoil, as it is more susceptible to and dependent on elements outside the region.
- By Nadia Saleem, Staff Reporter
- Published: 22:58 November 1, 2008
- Image Credit: Gulf News Archive
Dubai: The hotel sector in the Middle East expects to be hit significantly by the international financial turmoil, as it is more susceptible to and dependent on elements outside the region.
While some hotel chains have yet to feel a direct impact, others have contingency plans in place.
Michel Noblet, chief executive and managing director of Hospitality Management Holdings (HMH), told Gulf News: "The credit crunch is definitely taking its toll on our industry. Like most companies worldwide, we too have our plans under the microscope."
Preparing for the approaching downturn, he said: "As businessmen and managers, we need to anticipate the situation."
'Monitoring trends'
Shujaat Yar, executive assistant manager of the Le Meridien Dubai and UAE area director of sales and marketing for Starwood Hotels and Resorts, said: "We are monitoring market trends closely. Should business conditions change, we will adjust our business strategies accordingly."
Though hotels that were supposed to come online have not been halted, alterations are taking place. "Keeping the financial turbulence in mind, we are going on a defensive mode and might change the order of priority assigned to our different projects," Noblet said.
The undercurrents of credit loss and stock market volatility have not affected hotel occupancy rates yet.
Yar said: "Travel continues from the traditional feeder markets and occupancies look strong for the remainder of 2008."
Additionally, profits in the near future are not likely to be affected so severely. "There are good reasons to believe we will be able to maintain profits despite the downturn. Being in the UAE, we have our advantages as it is an extremely resilient economy," Noblet said.
Picking up
Industry officials believe the hotel business could, in fact, pick up in the Gulf region even further as multi-national players move their investments and operational focus here.
Considering the continuing level of investments and the tremendous projects being launched here, there is a genuine feeling of future prosperity.
To minimise the impact of withering international travel, hotels are being careful about which markets they target.
"We are likely to be helped by markets outside Europe. It will take some time for the market to stabilise," Noblet said, adding, "Until then, we just have to [be] cautious about our resources."
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