Feature Articles: International Franchising
DLA Piper 2010 Middle East and North Africa Hospitality Outlook Survey
Here is a brief summary of the highlights of the report by Karen Friebe, Global Co-Chair Hospitality and Leisure group and David Sanson Partner, Real Estate, both of DLA Piper. The full report is a PDF, which you can download by clicking here:
DLA Piper 2010 Middle East & North Africa Hospitality Outlook Survey
(Adobe Acrobat PDF, 466Kb)
MIDDLE EAST HOTELIERS PROVE TO BE THE STRONGEST
76% of respondents describe their 12-month outlook on the Middle East and North African hospitality industry as
“bullish”. This contrasts with the results of DLA Piper’s equivalent 2010 surveys of the European and US hospitality
sectors, in which only 27% (Europe) and 32% (US) of respondents expressed bullish sentiment.
THE HOT SPOTS FOR INVESTMENT OPPORTUNITIES
Focus stayed close to home, with the Middle East selected as offering the best opportunities, followed by North Africa
and the UK in joint second place. The lack of interest in India and China is in marked contrast to the results of
DLA Piper’s US and European hospitality surveys, in which these two countries were amongst the top choices.
ROOM RATES FEEL THE PAIN
A decline in average room rates came across as the single most signifcant impact on business, selected by 87% of
respondents. This impact seems to have been felt more keenly in the Middle East and North Africa than in Europe,
where, although it was also identifed as the most signifcant factor, it was only selected by 45% of respondents.
IS RECOVERY AROUND THE CORNER?
A sustained recovery is not expected until 2012 or later by 82% of participants. This sheds an interesting light on the
bullish sentiment expressed in response to question 1, and indicates that such optimism may be mixed with caution.
BUDGET HOTELS SEE OPPORTUNITY IN THE MIDDLE EAST AND NORTH AFRICA
In common with the results of DLA Piper’s European hospitality survey, the economy and mid-market sectors were identifed as representing the most attractive opportunity for investors, by 63% of respondents. Of the Middle East-based respondents to the European survey, however, fewer than 50% concurred with this, which perhaps indicates that these opportunities are more attractive to the North African market.
LEISURE AND BUSINESS TRAVEL ON THE UP
Respondents tended to note a rise in both business travel (82%) and leisure travel (76%) over the last three months, which offers one explanation for the “bullish” attitude of the majority of respondents.
JOINT VENTURES – SOUND BUSINESS DECISION IN THE CURRENT MARKET?
An overwhelming majority of respondents (91%) consider that there will be increased opportunity for joint ventures in the Middle East and North African hospitality sectors. It appears from this that in an uncertain market investors are keen to spread the risk of new investments. Sharing of risks with a venture partner could be favourable for the “cautious” investor.
LARGE HOTEL CHAINS STILL MAKE THEIR MARK
Almost all participants (91%) predict that large hotel chains in the Middle East and North Africa will increase their market share in 2010. Large chains are also predicted to take a larger market share in Europe, according to the results of DLA Piper’s European hospitality survey. It is worth noting in relation to this trend that commentators have identifed branding as one of the key factors infuencing consumer preference.
PROFESSIONAL ADVICE ON THE DECLINE
Industry associations appear to have fared the worst, with a slight majority of 48% indicating that they are now seeking considerably less advice from this source. Lawyers were the only group to emerge relatively unscathed, with 90% of respondents taking either about the same level of or considerably more legal advice than 12 months ago.
DLA Piper 2010 Middle East & North Africa Hospitality Outlook Survey
(Adobe Acrobat PDF, 466Kb)
