Region to generate 15% of Premier Inn revenues

Revenues from the Middle East could account for up to 15 per cent of the total earnings of budget hotel chain Premier Inn by 2015, said a top company executive.

Presently, the same figure is "negligible" and would "not even be one per cent" of the group's £1.33 billion (Dh7.67bn) turnover or pre-tax profit of £228.2 million, said Darroch Crawford, Managing Director, Premier Inn, Middle East.

"Revenues of Premier Inn in the Middle East will reach 15 per cent of the group's revenue by 2015, as we would have about 5,000 rooms in the GCC by then. The percentage is negligible now as we have 584 hotels in the UK and just three in the GCC," he told Emirates Business.

Premier Inn, a 50:50 joint venture between the Emirates Group and Whitbread of the UK, last week opened its third property in Dubai at Dubai International Airport. The company is in an expansion mode, though the pace of growth has been revised, according to Crawford. "Despite this, the company is all set to invest about £150m in the region," he pointed out, adding that new hotels would be coming up at several places, including Abu Dhabi, Oman and Doha.

"On average, one hotel project costs anywhere between Dh80m and Dh120m," said Crawford.

Premier Inn has a substantial land bank, including four land parcels, at strategic positions in the Northern Emirates. In Abu Dhabi, the hotel is expected to be operational by the end of next year while the other hotels could be operational anytime by the end of 2012.

It is also expected that Premier Inn could expand in the Middle East outside the GCC. "We do not have any immediate plans but we can expand outside the GCC in the Middle East," he said.

Crawford further indicated that bottom line of the business has been under pressure following the global slowdown. Premier Inn recently slashed its room rates by 40 per cent to boost demand, and is looking to further soften average room rates in this quarter, according to Crawford.

"While demand has increased due to this step, the bottom line has taken a beating," he added.

Yet, the UK's largest hospitality company is bullish on the GCC.

"Throughout the hotel industry, there has been a general slowdown of expansion and the climate is one of caution. However, Premier Inn is taking advantage of the increase in budget-conscious travellers and a decrease in corporate travel expenses by continuing to open hotels as planned," said Crawford.

The hospitality sector throughout the world has been struggling and the Middle East has not been an exception. Though international analysts indicate that the revival has commenced in the West and the Middle East, hospitality companies, too, would emerge out of the red by the end of December this year or the first quarter of 2011.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.