Barceló Hotels Has the Middle East in the Crosshairs

Barceló Hotel Group, a Spanish operator with 234 hotels in 22 countries, is targeting opportunities in Oman, Saudi Arabia and Ras Al Khaimah after completing deals for its first eight hotels in Dubai and Sharjah.

The company, which is a specialist in managing larger, all-inclusive resort hotels, opened its first property in the region - Barceló-branded hotel apartments in Dubai Marina - at the end of last year.

It is also in the process of refurbishing the Sharjah Grand Hotel after signing a management agreement with the hotel’s owners, which will lead to the property being rebranded as an Occidental Sharjah Grand hotel, and has five more openings planned between now and 2020 - four of which are in Dubai and one in Fujairah.

Most of the hotels planned are urban-style hotels - two are set to open in Dubai's International Media Production Zone later this year, followed by one at Al Jadaf next year and one at Dubai Creek in 2020, alongside the Fujairah resort.

However, chief development officer Jaime Buxó said that the company sees opportunities in the all-inclusive market, which is still a relatively rare category in the region, although Nakheel has agreed a deal with Spain's RIU Hotels for an all-inclusive resort at the new Deira Islands development, and Rixos Hotels offers all-inclusive stays at its Palm Jumeirah hotel.

Buxó said that he sees Ras Al Khaimah and Oman as destinations where an all-inclusive resort would work well.

Buxó said the company also has useful development experience that it can offer to governments looking for investment in sites that are being built from scratch.

"In the Caribbean, many of the destinations where we arrived - for example, like Punta Cana in the Dominican Republic, one of the most popular resort destinations... when we arrived there, it was nothing,” he said.

Barceló Hotel Group has grown fairly substantially in recent years - partly as a result of its buy-out of Spain's Occidental Hotels in 2015. A further merger with Spain's NH Hotels was mooted late last year in a deal which would have created Spain's biggest hotels group, but the latter rebuffed the advance, stating that the $3 billion offer did not offer enough value to its shareholders.

Even without that deal, Barceló remains a sizable business with a turnover of more than €4.3 billion ($5.2 billion). The company sold its 25 percent stake in a real estate investment trust it helped to create at the end of last year, which helped to push up earnings before interest, tax depreciation and amortization (EBITDA) to €495.6 million, according to Buxó, while its net debt currently stands at just over €330 million.

Buxó says that it does not share the same "asset light" model adopted by many of the world's biggest groups, which focus on hotel management contract deals with property owners as opposed to retaining assets. Although about one-third of its hotels are managed and another third run via franchise agreements, Buxó said that Barceló still owns one-third of its portfolio and is willing to co-invest in projects alongside developers.

It is also keen on the Saudi Arabian market, for instance, but sees opportunities in the kingdom more in large-scale urban hotels, as opposed to resorts.

He sees development in the kingdom "probably with a local partner, he needs to develop a large hotel of 1,000-1,500 rooms and needs somebody with the skills to deliver that type of hotel".

He said the company has experience of running large-scale resorts, particularly in the Caribbean. In Mexico, it runs a hotel resort where a fourth phase of development is underway which, when complete, will bring the total capacity of the hotel to 3,300 guests.

Until recently, however, most of its properties have either been in Spain, the United States or the Caribbean.

Source: Zawya