Document

Report
Hotel Investment – The next move
June 2014
Hospitality Business Summit
2013
92
2013 OPERATOR SEARCH
STUDIES
HBU’s
FEASIBILITIES
STRATEGIES
12 PROCESSES
153 LOI – MOU’s
7 AGREEMENTS
$2.1m SAVINGS
7
153
PEOPLE
HOTEL ASSET MANAGEMENT
11 HOTELS
OVER
PROFESSIONALS
OVER 100 YEARS
COMBINED EXPERIENCE
4000
HOTEL VALUATIONS
KEYS
$6.3
2013 10.3% AVERAGE
BILLIONS
EBITDA INCREASE
COMBINED
ASSET VALUE
38,043 KEYS
ADDED VALUE
Offices:
Dubai, Abu Dhabi, Doha, Riyadh, Jeddah, Cairo
16 YEARS LOCALLY
100’s HOTEL P&Ls
1000s AGREEMENTS
GLOBAL BENCHMARKS
Colliers International Hotels
Range of Services
Asset /
Facilities
Management
Highest & Best Use Assessments
Financial Feasibility Study
Land Lord / Tenant
Representations
Valuation &
Brokerage
Project Lifecycle
Operator Search
and Selection
Identification of
Market
Opportunities
Investment Teasers /
Information
Memoranda
Portfolio
Assessments
Business
Plans
3
Dubai
Current Supply
Current Demand
0
2004
2005
2006
2007
2008
Hotel Supply (No. of Keys)
2009
2010
2011
2012
2013
2009
2010
11.4
29.0
19.0
16.7
2008
7.6
16.7
15.9
2007
9.6
2006
CAGR + 10.0%
2011
2012
CAGR + 17.7%
2013
Hotels
10% Growth for Hotel Guest nights
18% Growth for Hotel Apartment Guest nights
110,000 Keys by 2018
Future Demand
120,000
CAGR +4.2%
100,000
80,000
2005
Serviced Apartments
Serviced Apartment Supply (No. of Keys)
Future Supply
2004
6.1
0
5.8
31,645 32,617
26,155 29,834
5
4.7
40,981 43,419
62,285
57,343
51,115 53,828
14.0
10
10,190
3.6
10,000
7,278
9,217
15
2.9
30,000
8,395
CAGR +10.1%
2.9
40,000
18,068
13.4
15,618
20
12.3
50,000
21,015
23.3
23,069
19,840
60,000
20,000
25
24,171
70,000
30
12.5
CAGR +14.3%
80,000
35
26.0
90,000
Millions
51% - 5 Star and 4 Star
100,000
29,460
25,443
29,681
29,681
26,636
24,171
60,000
CAGR +5.4%
40,000
62,285
68,584
71,167
2013
2014(f )
2015(f )
79,861
80,868
81,068
2016(f )
2017(f )
2018(f )
20,000
0
Hotel Supply (No. of Keys)
Source: Colliers International, 2014
Serviced Apartment Supply (No. of Keys)
Tourism
Infrastructure
Destination
Dubai –
Corporate
Leisure
Double Digit Growth
We expect the trend to continue
Mega events
Expo 2020
4
Abu Dhabi
Current Supply
Current Demand
6
6.0
4,709
7
3,428
12,000
5,000
6,238
6,787
2006
2007
2
18,261
2,828
13,929
15,568
1
9,398
7,503
2010
2008
2009
2010
2011
2012
Future Supply
33,000 Keys by 2018
30,000
6,751
6,687
6,051
Future Demand
7,107
6,751
5,225
CAGR +7.3%
15,000
18,261
2013(e)
19% Growth for Hotel Guest nights
12% Growth for Hotel Apartment Guest nights
CAGR +6.3%
10,000
2011
2012
Serviced Apartments
Hotels
2013
Serviced Apartment Supply (No. of Keys)
35,000
25,000
CAGR + 11.5%
0
0
Hotel Supply (No. of Keys)
1.9
2,288
2,662
3
1.9
10,000
CAGR + 19.4%
3.5
CAGR +16.6%
4.4
4
4,231
1.6
15,000
20,000
5.1
5
4,550
2.3
5,225
20,000
CAGR +12.5%
Millions
61% - 5 Star and 4 Star
25,000
20,907
21,809
23,020
2014(f)
2015(f)
2016(f)
25,264
26,007
2017(f)
2018(f)
Continued
investment
Leisure
destination –
Saadiyat/ Yas
MICE and
Business
positioning
5,000
0
2013
Hotel Supply (No. of Keys)
Source: Colliers International, 2014
Serviced Apartment Supply (No. of Keys)
Introducing new segments into the market
Consolidating the existing demand
5
Market Performance
Evolution of Key Performance Indicators: 20011 – 2013
90%
Sharjah
80%
Dubai
Tourism Hub
Dubai
Jeddah
Ras Al Khaimah
Occupancy (%)
Fujairah
70%
Abu Dhabi
60%
Abu Dhabi
Emerging MICE
and Leisure
Muscat
Al Ain
Riyadh
Cairo
50%
Ras al Khaima
Affordable Luxury
Al Khobar
40%
30%
70
90
110
130
150
2011
170
190
ADR (USD)
2012
210
230
250
270
Fujeirah
The Getaway
2013
Source: STR Global, Colliers International, 2014
Average occupancy in Dubai reached 81% in 2013 with an ADR of USD 247; Abu Dhabi, on the other hand,
experienced a rate compression with an ADR of USD 132 in 2013 while the occupancy recovered to reach
6
69%, we expect further recovery as the market consolidates
Opportunity: Mid market hotels
Mid Market Hotels
Gap
Cost
Efficiency
Market Gap
Supply Gap/ Rate Gap
Wider audience/ Target Market
Projected Occupancy of 80% to 85% by 2018
Lower Investment/ Incentives
Incentives by authorities (Land)
Budget hotel investment range: USD 90,000 to USD 110,000
Upscale hotel investment range: USD 160,000 to USD 180,000
Efficient
Optimum utilization of BUA
Short construction/ fit out period
Efficient operations: GOP in the range of 40% to 55%
We expect the mid market hotel segment to experience considerable growth in the next 3 to 5 years
7
Opportunity: Serviced Apartments
Serviced Apartments: Operating Model
Standard (All)
Residential
Serviced Apartments
Rooms sold on
daily basis
Annual contracts
Annual or
quarterly
payments
Rooms sold on
annual basis
Lower operating
costs
Extensive streetlevel retail
Limited staff to
unit ratio
Hotel
Full kitchen
Rooms sold on
monthly basis
Payment post-stay
Monthly payments
Kitchenette
Limited food and
beverage options
Mini bar
Cleaning 2 to 3
times per week
Restaurants
0.51 Staff
per unit
High staff to unit
ratio
Higher operating
costs
Full range of hotel
services
0.78 Staff
per unit
Leisure facilities
Deluxe (Branded)
Limited services
No cleaning
Deluxe (All)
Daily cleaning
Features
unique to
Residential
apartments
Possible common features
between Residential
apartments and Serviced
Apartments
Features
unique to
Hotel
apartments
0.60 Staff
per unit
Possible common features
between Hotels and
Serviced Apartments
Features
unique to
Hotels
With average occupancies over 85% in many parts of the city, many serviced apartments in Dubai are confident
that they will be able to fill with transient demand paying strong rates and see long stay guests as an erosion of
potential revenue streams
Deluxe (Unbranded)
0.84 Staff
per unit
8
Opportunity: Branded Residences
The Concept
The Premium
PHYSICAL ATTRIBUTES SERVICES & AMENITIES IMAGE & ASSOCIATION
Prime
Residential
Product
Premium
Branded Hotel
•New construction building
•Unique features (e.g.
Rooftop pool)
•Very good accessibility
•Luxury brand
•Iconic building design
•Star Architect
•Famous building name
•High floor
•Prime global city
•Prime neighborhood
HIGH PREMIUM
30-40% AND HIGHER
•High-end finishing
•Branded quality white
goods and electronics
•Easy accessibility
•Hotel amenities
•Health club
•Spa
•Valet parking
•Boutique/lower tier brand
•Unique building design
•Recognized architect
•Desirable views
•Renowned
location/neighborhood
MEDIUM PREMIUM
15-30%
Branded
Residences
•Conversion building
•Communal facilities (e.g.
garden)
Source: Colliers International, 2014
•Five-star hotel services
•High-end restaurants
•Extensive luxury leisure
facilities
•Luxury spa
•Private parking
•24 h security
•Limited leisure facilities
•Professional architect
•Good
location/neighborhood
•Low floor
LOW PREMIUM
15% AND LOWER
Strength of hotel brand ensuring high occupancy and stability in returns; In a rising residential market, benefits capital value
appreciation; In a rising hotel market income growth from increases in Average Room Rates; Minimum hassle – maintained and
managed by hotel operator; Low security and damage risk; Ability to use the residence for personal use on a set number of days
9
each year (0-14 days)

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