Hilton to double Middle East portfolio and enter new markets

Hilton, the New York-listed global hotels company, plans to double its portfolio in the Middle East to around 160 hotels over the next three to five years, with growth driven by Saudi Arabia, the UAE and several key African markets, its regional president said.

"We are extremely strong in Saudi Arabia and the UAE, while new entries in Tunisia, Nigeria and Morocco are performing well," said Rudi Jagersbacher, president for Middle East, Africa and Turkey at Hilton, told The National in an interview. Average hotel revenues across the portfolio rose in the past 12 months, though not as much as they did in 2017 or earlier, he added.

He declined to provide figures as the publicly listed company is due to report its first-quarter 2019 financial results in the coming days. Average revenue per available room (RevPAR) across Hilton’s Middle East and African portfolio increased by 1.8 per cent annually in full-year 2018, and global average RevPAR is expected to grow by between 1 and 3 per cent in 2019, the company said in a bourse filing in February.

Hotel revenues and room rates across the Middle East and North Africa have declined in recent years due to rising supply and lower oil prices denting consumer purchasing power.

Hilton has around 150 hotels in the Middle East, Africa and Turkey and 160 more in its pipeline, equating to an additional $9 billion of development value, Mr Jagersbacher told The National. The UAE portfolio is set to double in three to five years, while the Saudi Arabia portfolio will more than quadruple in the same period to over 50 from 12 today. There are currently 34 new hotels in the Saudi pipeline and Hilton recently signed to open another six.

Planned growth in religious tourism is a particular draw for Hilton, Mr Jagersbacher said. Saudi Arabia aims to attract 30 million pilgrims by 2025 as part of plans to boost the tourism sector under the Vision 2030 economic diversification roadmap.

As well as targeting new countries in Africa to spur future growth, Mr Jagersbacher is eyeing re-emerging markets including Syria, Iraq and Pakistan. “There are definitely big opportunities as they develop into economically viable and compliant states, and we want to be represented there,” he said.

“Take Syria and Iraq – a lot of money is going into rebuilding those countries and inevitably they will need hotels.” Any plan to enter such markets would require rigorous due diligence and careful planning.

He also expects increased take-up of Hilton franchises in the Middle East – a business model that has been slow to take off in the region’s hospitality market. Hilton’s three hotels at Al Habtoor City in Dubai – totalling 1,600 rooms – are franchised, and the practice “will definitely grow”.

There are no plans for acquisitions of smaller hotel companies in the region as Hilton marks its 100th year of operation in 2019, Mr Jagersbacher added. “We believe in organic growth globally and regionally, we have a strong global brand, and don’t see any opportunity in buying another company,”