Bahrain Hotels. Destination Bahrain. Catering to Generation X&Y. February 2016

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1 Bahrain Destination Bahrain Catering to Generation X&Y February 2016

2 SUPPLY A total of 691 keys opened in 2015, with the newest hotels being Four Seasons Bahrain Bay and Ibis Seef Manama. Looking forward, five-star hotel openings will dominate with notable openings such as the Downtown Rotana (249 keys) and the One & Only (150 keys). Supply is expected to grow at a compound annual rate of 11%, with Al Seef and Amwaj Island expecting an entry of more than 1,100 keys in the next three to five years. MARKET PERFORMANCE Bahrain is predominantly a weekend leisure destination, with the leisure demand from Saudi Arabia and other neighbouring source markets, representing approximately 60% of overall hospitality demand. The market saw subdued corporate demand in 2015 due to declining oil prices and slowing economic activity. However, leisure demand growth in Bahrain is expected to remain healthy as the market continues to benefit from its proximity to Saudi Arabia, its retail and entertainment offering, combined with the planned delivery of large tourism developments. OUTLOOK PROJECTED QUALITY HOSPITALITY SUPPLY NO. OF KEYS 5,415 OCC% ADR RevPAR 6,106 Source: STR Global, Colliers International 7,294 Note: Accounts for adjustments in opening delays KPIs YOY % CHANGE +1% +17% -9% +1% -1% +6% -3% Occ 50% +2% USD $ 214 FY 2013 FY 2014 FY 2015 Forecast FY 2016 OPPORTUNITIES 7,814 9, (f) 2017(f) 2018(f) As the market becomes saturated with traditional five-star hotels, opportunities arise in the development of lifestyle hotels, targeting the younger generations X & Y. These generations are less focused on luxury amenities and large spaces, but tend to be more price-sensitive and would rather stay in a uniquely designed hotel with smart functionality and trendy food and beverage offerings. Lifestyle Efficient design, but trendy Trendy F&B Offers Opportunity to attract younger generation and create a destination hotel. With competition due to increase, investors should consider simple efficient design with unique draw factors. Focus on trendy food and beverage concepts becoming a draw factor for the hotel. 2

3 Generations X & Y LIFESTYLE HOTELS - CONCEPT The lifestyle concept has gained popularity over the past few years, especially in more mature markets such as Europe and USA. International operators have in past years launched a myriad of new brands in the lifestyle category, such as W, Aloft, Indigo, Andaz by Hyatt, Venu, Mama Shelter and ME by Melia. These hotels tend to include a lobby with an open floor layout, Play atmosphere, while the interiors of guest rooms are equipped with the latest technology and modern design elements. Lifestyle hotels are typically located in city centers, and are known to be social hotspots for both in-house guests and local residents. HOTEL COMPARISON Typical Boutique Lifestyle Wide range of F&B outlets. Signature restaurants. Hotel size usually exceeds 150 rooms. Ample meeting and banqueting space. Design centric. Less than 100 rooms. Intimate and private layout. Usually 1 unique restaurant. Typically no brand affiliation. Design centric. Located in heart of the city. Social hotspot. Some meeting facilities. Guest rooms combine work and play environments. Typically with brand affiliation. GENERATION X & Y PROFILE Generation Y Generation X LIFESTYLE HOTELS FOR GENERATION Y Considering that the tourists stem from the GCC region, opportunity lies in developing lifestyle hotel product capable of catering to the needs of families, and young travelers. MIDSCALE HOTELS FOR GENERATION X Needs & Preferences: -tech in Rooms consciousness to online platforms locations operations. Ages: Needs & Preferences: atmospheres for families catered to their children & Entertainment operations. Currently there are over 500 keys of hospitality supply which are attached to major retail centres, most of which are high-end, large internationally branded hotels or serviced apartments. Nonetheless, these properties tend to perform better than the overall market, maintaining average occupancies of 80 85%. This is attributed to their connectivity to a retail component, a draw factor for GCC families, as well as business guests seeking proximity to restaurants. This highlights an opportunity to develop midscale hotel properties connected to retail developments, which are able to sustain rates under-cutting the five-star hotel rates. BAHRAIN GUEST SEGMENTATION (2014) 28% KSA GCC Excl. KSA 57% 9% Other Arab 6% Others Source: Bahrain Economic Development Board; Central Informatics Organization 3

4 W N S E Upcoming Developments in Bahrain Diyar VIDA Hotel & Residences The Address Hotel & Residences Delmunia Amlak Amwaj Rotana Islands JW Marriott Wyndham Marina Club The Avenues The One & Only Upcoming Masterplans Upcoming Anantara Resort Durrat Al Bahrain Bilaj Al Jazayer Fairmont & Resorts The Kingdom of Bahrain holds a large number of development projects which are currently under way, and supported by the GCC Development Fund, government holding companies, and the private sector. These projects vary in typology, ranging from simple hotel developments to full-fledged master plans which include a variety of real estate components. projects is currently USD 32 billion. The exhibit below highlights a selection of key upcoming developments. Examples of Upcoming Future Projects Features & Impacts Project King Hamad Causeway Overview & Features A second causeway connecting the kingdoms of Bahrain and Saudi Arabia featuring a rail link spanning 87 km. The project cost is estimated at USD 3 billion and is expected to be completed within the next 10 years. Impacts The proposed causeway is expected to reduce the current heavily congested King Fahad bridge connecting the two countries and be able to support additional traffic, which in turn is economy. Dilmunia Masterplan The Avenues Bahrain Marassi Al Bahrain (Part of Diyar Al Muharraq Project) Developer: Ithmar Development Company, Location: Off the coast of the Galali district featuring a variety of lifestyle residential, commercial, medical, and leisure components. Residential products range from studios to waterside townhouse and high-end villas. Size: 265,000 sqm Developer: Private local investors, MH Alshaya and Mabanee Corporation Expected Opening: to the public during 2016 Featuring a variety of dining, shopping, fitness and entertainment facilities. Developer: Joint venture between Eagle Hills and Diyar Al Muharraq Phase 1 is expected to include: 178,000 sqm mall, 2 apartment towers, and more than 500 hospitality keys operated by Emaar Hospitality. Following phases will include: cruise liner terminal, traditional souq, and an 80,000 sqm business and technology center. These developments are expected to attract additional demand to the country, while reducing the congestion found in Bahrain's current leisure and retail destinations during weekends and Eid holidays. Appeal to regional tourists will increase, especially families from Saudi Arabia. Further expansion of leisure and retail product offerings such as these are expected to attract additional demand from existing source markets, and cater to demand from local residents. 4

5 Score out of 100 Data for January 2016 The Guest Experience Index (GEI) are based on online guest reviews and represent a weighted score on a scale from 1 to 100. GUEST EXPERIENCE INDEX (GEI) - SCORE MAPPING - BY GCC MARKETS Score out of Kuwait 74 Riyadh 76 Al Khobar 75 Manama 78 Doha 82 Abu Dhabi 75 Ras Al Khaimah 78 Dubai 75 Muscat W N E MANAMA GEI - BY TYPE OF PROPERTY Friends Business Solo Couples Families 67 Hotel - 3 stars MANAMA RATING - BY TYPE OF GUEST Hotel - 4 stars Rating out of Hotel - 5 stars Hotel Apartments MANAMA GEI - TOP 10 BRANDS Rank Brand GEI 1 Four Seasons Fraser Suites InterContinental Marriott Executive Apartments Moevenpick Residence Inn Ritz-Carlton Sofitel Swiss-Belhotel Westin 84.5 GCC competitive landscape: line with that of neighbouring markets. Type of Property: -star hotels achieved the highest GEI rating of 83. The lower score in the 3-star segment shows a gap of quality midscale hotels. Type of Guest: Guests Visiting Friends and Relatives (VFR) were most satisfied, with a rating of This is followed by Business guests likely due to the abundant hotel options in the city centre near major commercial hubs. The comparably lower satisfaction from families highlights potential opportunities to develop products with a greater focus on this segment, by providing more leisure oriented facilities and food & beverage concepts. S 5

6 Colliers International Colliers International division is a global network of specialist consultants in hotel, resort, marina, golf, leisure an spa sectors, dedicated to providing strategic advisory services to owners, developers and government institutions to extract best values from projects and assets. The foundation of our service is the hands-on experience of our team combined with the intelligence and resources of global practice. Through effective management of the hospitality process, Colliers delivers tangible financial benefits to clients. With offices in Dubai, Abu Dhabi, Jeddah, Riyadh and Cairo, Colliers International combines global expertise with local market knowledge. SERVICES AT A GLANCE The team can advise throughout the key phases and lifecycle of projects Destination / Tourism / Resort / Brand Strategy Market and Financial Feasibility Study Development Consultancy & Highest and Best Use Analysis Operator Search, Selection and Contract Negotiation Pre-Opening Budget Analysis and Operational Business Plan Owner Representative / Asset Management / Lenders Asset Monitoring Site and Asset Investment Sale and Acquisition/Due Diligence RICS Valuations for Finance Purposes and IPOs Our hotels team in the MENA region: $9 39,200 8,880 billion keys Hotel keys investment value of valued under asset management projects advised 6

7 502 offices in 67 countries on 6 continents United States: 151 Canada: 46 Latin America: 26 Asia Pacific: 190 EMEA: 89 $2.3 billion in annual revenue 1.7 billion square feet under management For further information, please contact: Filippo Sona Director Head of MENA Region Main Mobile filippo.sona@colliers.com Selim El Zein Associate Director MENA Region Main Mobile selim.elzein@colliers.com Ian Albert Regional Director MENA Region Main Mobile ian.albert@colliers.com Colliers International MENA Region Dubai United Arab Emirates ,300 professionals and staff About Colliers International Colliers International is a global leader in commercial real estate services, with over 15,800 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world. In MENA Colliers International has provided leading advisory services through its regional offices since Colliers International currently has four corporate offices in the region located in Dubai, Abu Dhabi, Riyadh and Jeddah. colliers.com Colliers International, 2015 The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.