Premier Inn, Britain’s fastest-growing budget brand, is continuing its ambitious expansion into warmer climates. It plans to branch into Oman only a year after the successful opening of a hotel in Dubai. The company’s joint venture with The Emirates Group, Premier Inn Hotels LLC, aims to open three sites in Oman, which recently was flagged by Vogue Magazine as one of the world’s hottest new destinations. Hotels will open in Muscat, the capital, and Sohar and Salalah, the country’s two major port cities, by 2010.
“Our joint venture in Oman is the first of a number we are planning in a region in which we hope to become as influential in our sector of the market as we are in the U.K.,” said Darroch Crawford, managing director of Premier Inn Hotels LLC. The company plans to have 6,000 rooms across the Middle East by 2012. Crawford believes there is “significant unfulfilled demand for affordable accommodation and a market in which we believe the Premier Inn brand would be particularly well received.”
While Dubai, dubbed the Las Vegas of the Middle East, often makes the headlines for its glitzy, luxury hotels like the Burj Al Arab, Crawford said that there is a proven need for less wallet-busting options, and the company’s first budget hotel there is trading at a level above the company’s expectations. Also jumping on the budget bandwagon is local luxury chain Rotana, which plans to start building a 500-room, low-cost hotel in Dubai World Central early next year.
Crawford is not surprised that other companies are following Premier Inn’s lead.
“We have yet to find a market where the demand for good value for money is limited, and the Middle East is no exception,” he said.
Now that luxury leisure and business travel are expected to feel the pinch in light of the global financial crisis, its room rates, set as low as £83 (about $USD24), make the time right for Premier Inn’s expansion, Premier executives believe. According to Euromonitor International’s World Travel Market 2008 report, the international tourism industry faces a tough 2009, but the Middle East is providing some positive relief for the sector. One key trend picked up by Euromonitor is the continued large increase in the number of expatriates from Europe and Asia moving to and working in the Middle East, leading to more expats vacationing in the region.
“Our weekend occupancy levels are extremely strong with guests, mainly from other countries in the (The Gulf Cooperation Council), enjoying short breaks in Dubai,” Crawford said.
With leisure and business travelers tightening their belts, Premier Inn is betting that the budget market will boom worldwide. Aside from the Middle East, the brand also has a joint venture with Emaar-MGF to open 80 hotels in India by 2017.
It makes sound business sense to diversify, according to Crawford.
“Investment in a range of international markets provides some protection against the inevitably cyclical nature of local economies,” he said.