INTERNATIONAL REPORT—Kuwait seems an unlikely place to put a designer-led hotel, but The Rezidor Hotel Group is confident the Hotel Missoni is well-positioned to capitalize on local trends.
Kurt Ritter, CEO and president of Rezidor, the operator of Hotel Missoni Kuwait, said although tourism traffic is low to Kuwait, the company saw an opportunity to capitalize on a growing trend of fashion, culture and brand recognition after meeting with the Missoni team. The stakes were high, but the investment, he said, seemed profitable.
"Part of what makes Hotel Missoni Kuwait unique is the sort of personalized luxury that the Missoni want to invite guests to their own homes, and Rezidor understood how this would translate to a 5-star resort," Ritter said. “As a management company, we had good reasons to promote Hotel Missoni to the owner: The Middle East is very receptive towards this new kind of luxury-lifestyle hotel. International luxury brands are enormously popular in the Middle East—people shop at Gucci in the region's famous malls, drive Mercedes and BMWs, enjoy Petrossian caviar at special events, etc. So bringing a world-famous Italian fashion brand like Missoni to a Middle Eastern hotel makes sense from a local consumer perspective.”
Analyst expectations
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But can the 69-key property—located in part of the Symphony Center in the shopping district of Kuwait City and adorned with nearly 10 million individual mosaic tiles and offering sweeping views of the Arabian Gulf—withstand the economic fluctuations of the turbulent region?
"Kuwait's hotel market is well-controlled. New developments are rare and pairings between operators and owners are usually of a high calibre," said Greg Perry, associate at HVS Global Hospitality Services in Dubai. "Since the oil boom in the 1970s, the (Gulf Cooperation Council) has always been focused on luxury, and Kuwait is no exception. New developments in Kuwait such as the 360 Mall, the Avenues Mall and the Hotel Missoni, are aiding the upmarket attitude of the country."
The hospitality industry took a 25% hit during the economic crisis globally, but analysts—and Rezidor—are predicting a recovery that exceeds expectations.
STR reported Kuwait was the strongest performing market in the Middle East in 2003, thanks in part to the media and military who frequented the region. As they made their way out, Kuwait made plans to re-develop the tourism industry. In March 2004, visa regulations were revised, which meant visitors from North America, Western Europe, Southeast Asia, Australia and New Zealand had an easier time obtaining entry visas on arrival.
According to STR statistics, May 2011 Middle East hotel occupancy was down 12.5% but average daily rate rose 8.5%, showing signs that travelers are willing to pay more for high-end product when they do visit. Perry said average room rates through June 2011 for 5-star hotels is US$280, up about 4% when compared to the same period in 2010.
Average daily rate in Kuwait has decreased from an all-time high of US$260 in 2008, according to the HVS article, “2011 Middle East Hotel Survey: Shifting Sands.” However, Perry said the 7.3% drop in ADR from 2008 to 2010 in Kuwait pales in comparison to a 24% decrease in nearby Doha, a 32% decrease in Abu Dhabi and a 35% decrease in Dubai.
“If there ever was a definition of a safe and stable hotel market, today, it would be Kuwait,” he said.
But while the Kuwait economic recovery in tourism is on track, growth in the hospitality market is still slow. "Hotel development in Kuwait in relatively stagnant ... Developers aren't exactly clamoring to invest. The three most notable upcoming hotels in Kuwait City are the Ritz-Carlton, Hilton and a Ramada."
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So what does all this mean for Missoni Kuwait?
The Rezidor Group, citing “stakeholder sensitivity,” declined to give specifics about cost per key or what investments were agreed on to seal the project deal. The owner of the Hotel Missoni Kuwait is Al Tijaria Commercial Real Estate Company.
Ritter said Rezidor is not looking for a buyer for the Hotel Missoni Kuwait but rather for owners and developers for each property, as the hotel company plans to expand. The focus now, he said, is on introducing Kuwait to a new kind of luxury.
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"People in the region know all about pure luxury and sometimes might be fed up with it. They are now looking for a new kind of lifestyle, for unique and personal experiences, and for authenticity," said Ritter, whose ties to the region are still strong after his first GM position at Rezidor's Radisson Blu Kuwait. "We want to provide luxuries that make sense, that make guests feel at home in a place that is also incredibly chic and undeniably Missoni. While obviously the destination has changed and Hotel Missoni Kuwait is a different type of luxury lifestyle hotel, it makes the project especially meaningful for me."
As for how the hotel will help the overall Kuwait economy, Perry said there's a significant ramp-up process.
"The hotel will do more for the brand in the region than what the brand can contribute to financial performance," he said. "For most, Hotel Missoni Kuwait is new—and in a country under the regional 'spell' where brand power means more than just how much you paid for the room, Missoni may take a while to catch up to the other fashion upstart hotel in the region, Dubai's Armani Hotel."
Still, the fine lines and unmistakable Missoni prints that adorn the palettes of gold, turquoise and beige, combined with Hans J Wegner’s Wishbone Chair, oversized urns, and million-dollar art work is bound to make an impact on the burgeoning region’s hotel sector.