Wyndham Hotels plans 30% portfolio growth in the Middle East
Opportunity knocks for US hospitality firm as mid-scale segment grows
Wyndham Hotels & Resorts, the New York-listed hospitality company, expects to grow its portfolio of hotel rooms in the Middle East and Africa by 30 per cent by 2022 from 10,500 rooms today, to capitalise on rising demand in the mid-scale sector.
“We always say ‘follow the planes’ as this is the best indicator of which markets hotel guests want to be in,” said Dimitris Manikis, president and managing director, EMEA, at Wyndham Hotels, in an interview with The National this month - his first since being appointed to the role in April.
“Whether it’s the rise in tourism attractions, conference centres, theme parks - these things are bringing a combination of international, domestic and transit visitors to the Middle East.”
Wyndham is also scouting for potential acquisitions in the region. “There is no business that is doing its duty to shareholders if it is not looking at opportunities to buy,” said Mr Manikis. He declined to say whether any talks are ongoing at present.
In the UAE, Dubai received 8.1 million tourists in the first half of this year - nearly flat year-on-year growth, but the number of visitors from China and Russia in particular rose thanks to the new visa-on-arrival system for both countries. Dubai has a target to reach 20 million visitors by 2020, and 75,000 hotel rooms are expected to be added to the market by then. The city also recorded the highest international overnight visitor spend in 2017 with tourists spending $29.7 billion (Dh109bn), a ranking of global cities by Mastercard found.
The number of hotel guests staying in the capital rose by 10.5 per cent in August compared to the same period last year, said the Department of Culture and Tourism – Abu Dhabi earlier this week.
Wyndham operates 20 brands globally, half of which are in the Middle East and Africa, including Wyndham Grand, Tryp by Wyndham, Hawthorn Suites and others.
The company is planning to debut its Super 8 budget brand in Dubai by the end of next year and another US brand, Days Inn, which is already in Saudi Arabia, will launch in the UAE in 2020, Mr Manikis said.
Wyndham sees substantial opportunities to grow its predominantly mid-scale brands across the region as the segment gains momentum. Hotel revenues across the Middle East and North Africa have fallen in recent years because of low oil prices denting consumer spending, and rising supply of hotel keys as the market matures.
However, in many markets including the UAE, hotel occupancy rates have held up indicating resilient demand, according to advisory firm EY’s Mena hotel report in August.
“Today we are confronted with the issue of oversupply, which has pressured rates and caused RevPAR [revenue per available hotel room] declines for the past two consecutive years with a few exceptions, such as Kuwait,” said Ignace Bauwens, Wyndham’s regional vice-president for the Middle East, Eurasia and Africa, who also spoke to The National this month.
The cost of constructing and operating mid-scale hotels is lower than for upscale properties. There is currently a 50:50 ratio of mid-scale to luxury hotels in the region, compared to around 80:20 in most developed markets, Mr Bauwens added. “So there is significant untapped opportunity.”
Wyndham grew its room portfolio in the mid-scale sector by over 25 per cent across the Middle East and Africa over the past two years.
Outside the Middle East, Wyndham is focusing on sub-Saharan Africa, where it has eight hotels at present with plans to double the number over the next three years.
It is eyeing Kenya, Benin and Senegal and wants to grow its presence in Ethiopia, where it has a Ramada hotel and three more under construction, and Nigeria, where it has one hotel in Abuja and an upcoming property in Lagos.
Updated: September 27, 2018 10:01 AM