Shaping The Future Of Hospitality Investment

The Middle East hospitality industry is at the brink of transformation, driven by technological advancements, shifting consumer preferences, and an increasing focus on sustainability.

With more than US$4.5 trillion worth of assets represented at the upcoming Future Hospitality Summit World 2024, prominent investors have shared their insights on the trends and strategies that are shaping the hospitality and tourism sector.

With input from Adeeb Ahamed, MD, LuLu Financial Holdings; Jamie Odgers, Director of Real Estate Advisory, Standard Chartered Bank; Dr Peter Ebertz, MD/Head of Hotels, Art-Invest Real Estate Management GmbH & Co. KG; Johann Kerkhofs, Head of Business Development, 12.18. Investment Management GmbH; Andreas Locher, Head of Department Investment Management Operational, Union Investment Real Estate GmbH; Danil Alex, Business Development Manager, Aldau Development, Nabil Nazer, CEO, MSA Capital Limited, and Mitra Ghamsari, Chief Executive Officer, Persepolis Investments.

Hospitality investors have several trends and markets on their radar for 2024 and beyond, with sustainability, stability and technology among the key top-of-mind factors. Markets to watch for investment include India, Egypt and the GCC.

What market trends are you currently most excited about?

Mitra Ghamsari, CEO, Persepolis Investments says one of the most exciting trends is the growing demand for branded residences and luxury real estate integrated with hospitality services.

This is evident in projects like SLS Madrid Infantas Residences, Padilla 32, and Sagasta 27, where we are transforming historic properties into ultra-luxury homes. This hybrid model between residential and hospitality sectors offers clients the prestige of luxury brands with the convenience of five-star hotel services, meeting the rising demand for exclusivity, privacy and tailored experiences. I also see increasing investor focus on sustainable developments and technology integration, which adds long-term value, she said.

Adeeb Ahamed, Managing Director, LuLu Financial Holdings, says he’s eyeing South East Asia and India.

India’s huge growth potential is key. The country is planning to increase travel spending from US$18 billion in 2023 to US$50 billion by 2030, so there will be considerable growth there over the next decade. The domestic market is particularly exciting, and it’s one of the new markets we are looking at investing in. In addition, the GCC, where news of the single visa programme will encourage more travel in the region, is of interest to us, he said.

Jamie Odgers, Director of Real Estate Advisory, Standard Chartered Bank, said: Increased penetration into the market from international brands and investors will provide a more diverse offering to end users, backed by support from government to provide access to land, assets and funding.

In the words of Dr Peter Ebertz, Managing Director | Head of Hotels, Art-Invest Real Estate Management GmbH & Co. KG: Looking at the European Hotel investment market, it’s exciting to see which drivers are fueling the new investment cycle that is about to begin. With the lifestyle and luxury segment very much evolving and so many new brands on the market, it will be more important than ever to develop superior operational business models.

Johann Kerkhofs, Head of Business Development, 12.18. Investment Management GmbH says several trends are in the spotlight, driven by regulatory developments and market dynamics.

ESG, rising capital costs, meaningful and luxury travel, and succession planning in family businesses are all exciting trends in our sector, he said. ESG has moved beyond being just a trend; it’s now a crucial driver of sustainable value creation and competitiveness in the hotel industry, especially in Europe. The growing demand for ESG-compliant properties, fueled by strict regulatory requirements, presents investors with attractive long-term returns.

Stabilising capital costs have renewed interest in hotel investments, particularly in properties that were previously less attractive due to financing conditions. An increasing focus on 'meaningful travel,' where travellers seek sustainable, authentic experiences, opens up significant investment opportunities in boutique hotels and luxury resorts. Plus, the upcoming generational shift in family-run hotels, especially in Europe, creates investment opportunities, added Kerkhofs.

Andreas Locher, Head of Department Investment Management Operational, Union Investment Real Estate GmbH, believes new trends have emerged in the budget and design hotel sector in Europe and the US.

Lifestyle elements, such as the leisure-like, stylish design of common areas to create an optimal connection between work and life are becoming increasingly important. Rooms tend to become smaller, but expectation of the quality of furnishings is rising. We’re seeing saturation in many markets for classic 4-star hotels, which are increasingly having to reinvent themselves.

Danil Alex, Business Development Manager, Aldau Development says that Egypt’s tourism sector has made a remarkable recovery, surpassing pre-pandemic records for annual visitors. The government has been instrumental in this success, offering strong support and incentives for the development of tourism infrastructure and the expansion of hotel supply.

In Cairo, there are significant opportunities in the leisure-driven Giza Governorate and the business-oriented Greater Cairo area. The market is experiencing an increase in supply of upper-upscale and luxury hotels, particularly as part of mixed-use and branded residence projects. This trend will potentially reshape the city's hospitality landscape, presenting excellent investment opportunities.

In the southern Red Sea resorts, luxury hotel brands have had a profound impact. We've observed a steady increase in ADR, demonstrating a market for higher-income, luxury-seeking guests. Meanwhile, on the North Coast, luxurious boutique properties are performing remarkably, he added.

For Nabil Nazer, CEO, MSA Capital Limited, one of the most exciting trends is how AI will disrupt the hospitality landscape and the guest experience.

So far, technological advances in hospitality have predominantly been contained to the back office and, aside from a few gimmicks, there has been minimal innovation for guests. Substituting a key with a plastic card or a phone app hardly qualifies as an experience leap! But AI could be a real transformational force across all guest touchpoints, from choosing a hotel, booking and checking in, to the continuous engagement and customization of the guest experience inside their rooms and across the entire hotel. The possibilities are limitless.

What is your outlook for hospitality investment in 2025 and beyond?

Jamie Odgers of Standard Chartered Bank points out that, globally, 75 per cent of the hospitality market is still domestic or close locality travels.

Dubai has seen exponential growth over the last three years since COVID, driven by population growth and buoyant perception of Dubai from a growing number of countries globally. We predict stable RevPARs and profitability in the next 18 to 24 months, while additional keys coming online are a testament to the maturity of the market, he said.

Johann Kerkhofs, Head of Business Development, 12.18. Investment Management GmbH predicts several promising developments.

Many family businesses may sell due to succession issues and rising capital costs, providing excellent opportunities for value-add investors like us. These situations allow us to acquire distressed properties in prime locations, update them through systematic renovations, and reposition them in the upscale segment with a strong focus on ESG.

The market is expected to stabilize, with investors increasingly focusing on both established and emerging markets. We anticipate significant growth in hotel property investment from the end of 2025, particularly in the leisure hotel industry, he added.

Danil Alex of Aldau Development is positive about hospitality investment in the short and medium term.

The global hospitality industry is expected to continue its recovery and growth trajectory, driven by increasing travel demand. In Egypt in particular, the market is poised for significant investment opportunities. While the full potential for growth in demand is currently being tempered by geopolitical challenges in the region, I believe that the country is on the brink of unlocking substantial value, he said.

The anticipated opening of the Grand Egyptian Museum will serve as a catalyst for leisure tourism, drawing both regional and international visitors. Alongside this ongoing improvements in touristic infrastructure across Egypt, from upgraded airports to enhanced transportation networks, will further support demand. New regional business hubs, particularly in Greater Cairo, are also expected to attract more business travellers, adding to demand for upscale and luxury accommodation.

According to Mitra Ghamsari, Persepolis Investments, the outlook in Spain and Southern Europe is very promising, with the branded residence model continuing to grow making cities like Madrid and Lisbon highly attractive due to their cultural richness and strategic locations.

What makes this region unique is the limited supply of such properties, while demand is surging among international investors who are drawn to the lifestyle and favourable real estate dynamics. For instance, in Madrid, the luxury real estate market is thriving, but there's a clear shortage of properties that offer both high-end amenities and hotel services. By 2025, we expect Spain to remain a top destination for luxury real estate and hospitality investment, particularly given the region’s strong post-pandemic recovery and increasing international interest, she said.

Where are the hot-spots for hospitality investments in the next 3 to 5 years?

For Standard Chartered Bank’s Jamie Odgers, conversion of office assets in prime locations and gateway cities, such as New York, London and cities in China, will be a key theme as work-from-home is here to stay.

Dr Peter Ebertz, Art-Invest Real Estate Management, believes that leisure destinations and well-focused products below the luxury segment will become very attractive. Art-Invest will continue to execute our ongoing developments and expand into the European leisure segment with a repositioning strategy.

Mitra Ghamsari, Persepolis Investments expects Madrid to remain a hot spots for luxury hospitality investments, particularly in prestigious neighborhoods like Chamberí (where Sagasta 27 is located) and Salamanca.

These areas have become prime targets for high-net-worth individuals looking for branded residences. Cultural significance combined with modern luxury is incredibly appealing. Besides Madrid, Barcelona, Lisbon, and Dubai are gaining momentum as they offer high growth potential in the luxury residential and hospitality sectors. Geographically, the focus will be on high-end urban developments, particularly in established global cities where demand outpaces supply, she said.

Andreas Locher, Union Investment Real Estate GmbH says that southern US markets like as California and Florida are well above the pre-coronavirus pandemic RevPAR level, due to a strong “bleisure” trend. In Europe countries such as France, Spain and resorts in Scandinavia are key.

Danil Alex, Business Development Manager, Aldau Development believes that Egypt is well positioned to become a central destination for hospitality investments in the region over the next three to five years.

The New Administrative Capital in Cairo is a prime investment candidate. It’s designed as a strategic business hub for the African region, and is expected to attract multinational corporations, governmental bodies, and international organizations, leading to a rise in demand for upscale hotels, serviced apartments and mixed-use developments. In addition, the Giza Plateau in Cairo, part of the government's Vision Giza 2030, is undergoing extensive redevelopment to establish itself as a premier cultural and tourism destination, creating a robust demand for hotels. The North Coast of Egypt, with areas like Ras El Hekma, is also emerging as a significant investment destination.

Nabil Nazer, MSA Capital Limited, predicts a lot of investment at major attraction destinations such as Ras Al Khaimah’s Marjan Island and the Red Sea coast.

In terms of asset class, boutique hotels are attractive, regardless of geography, because they stand out by catering to a niche market while providing an exclusive experience, he said.

What are your development plans for 2024 and 2025 – and are you entering new markets?

12.18. Investment Management GmbH will focus on targeted growth for its 7Pines Brand in top European destinations, particularly in the Mediterranean and Alpine regions.

Johann Kerkhofs said: These areas hold great potential, appealing to both leisure and sophisticated travellers. Despite the challenges posed by high capital costs, we have already announced a deal this year and expect to be even more active in these markets in the medium term. We’re also planning expansion in Middle East and Africa, particularly in the luxury segment, and Asia and the Caribbean could be attractive for our 7Pines brand, as they align perfectly with our brand’s philosophy.

Meanwhile, MSA Capital Limited is focusing inwards not outwards: upgrading existing hotel offering including soft and hard refurbishments, said Nabil Nazer. In addition, we don’t look at our restaurants simply as an addendum to the hotel, but rather as standalone destinations that are vying to attract outside guests. For this reason, we have launched new home-grown F&B concepts, starting last year with new beach concepts, and the re-opening of an existing restaurant this year. We’re now looking to replicate these successes across our other outlets.

For Persepolis Investments, the focus will be on delivering high-end branded residences in Madrid, with the completion of SLS Madrid Infantas Residences, Padilla 32, and Sagasta 27: historic buildings that are being meticulously restored to offer state-of-the-art amenities and ultra-luxury homes, according to Mitra Ghamsari, who said that the company aims to set new standards for branded residences in Madrid, blending modern convenience with historic charm.

Our approach will continue to target urban luxury markets, as we believe there is significant growth potential in the intersection of high-end real estate and hospitality services. We are also exploring new opportunities across Southern Europe, where the demand for branded luxury homes continues to grow. In terms of new markets, we are looking to expand into other major European cities, as well as select locations in the Middle East, said Ghamsari.

What sort of hospitality product would you choose if you were to invest privately?

For Dr Peter Ebertz, it would be a serviced apartment product in a leisure destination with a long season; Mitra Ghamsari would opt for branded residences that combine luxury living with full service hospitality; and Johann Kerkhofs would choose a smaller, mid-sized charming hotel – either a traditional country house in Tuscany or an exclusive lodge in Namibia – where he could apply his personal skills and passion as a host.

What excites you most? A new development, a new purchase, a new opening, or a sale?

Adeeb Ahamed is excited by new projects and acquisitions.

New projects mean an open canvas, and acquisitions bring the chance to look at how to use the history behind the asset. We successfully did this with Scotland Yard in London, which has been very well received by guests, he said.

Dr Peter Ebertz, Art-Invest Real Estate Management, said: We are currently actively purchasing and selling existing hotels, and it’s exciting to see which strategies are applied to these opportunities.

For Mitra Ghamsari, it’s new new developments. In her words: There is something incredibly rewarding about taking historic buildings—like Sagasta 27—and transforming them into luxurious modern residences while preserving their architectural heritage. Creating something new and seeing it come to life through high-quality craftsmanship and design is deeply fulfilling.

Johann Kerkhofs at 12.18. Investment Management, says that every location, concept, and market situation is unique, requiring tailored solutions.

This diversity is what makes working in hotel investment so exciting, he said. New developments bring the creative freedom; acquisitions present the potential to optimise and add value; new openings bring the excitement of launching a new property and writing its first chapter; and sales mean the culmination of a project and the chance to explore new opportunities, he said.

FHS World takes place at Madinat Jumeirah in Dubai, with an action-packed, three-day agenda from 30 September until 2 October

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About FHS Saudi Arabia

Dates: 14-16 April 2025

Location: Mandarin Oriental Al Faisaliah, Riyadh, Saudi Arabia

Sponsors: Mandarin Oriental Al Faisaliah, Riyadh and Al Khozama Investment as Host Sponsors; Taiba Investments as Founding Partner; Al Rajhi Bank, NEOM, Red Sea Group, Saudi Icon, Saudi Hospitality Company (PIF), Amsa Hospitality, TDF, The Ascott as Strategic Partners; Accor, Rotana, ClubMed, Radisson Hotel Group as Headline Sponsors; Aleph Hospitality, ARC-IDC, Ark People Solutions, AtkinsRealis, Compass Project Consulting, Domus Managed Housing, Golden Tulip MENA / Louvre Hotels Group, IHCL, Knight Frank, Melia Hotels, Minor Hotels, Quo, Rove and Wyndham Hotels & Resorts as Sponsors; Shaza Hotels, Time Hotels, Valor Hospitality and WhiteWater as Exhibitors.

Anne Bleeker
In2 Consulting
+971 56 603 0886
The Bench