Middle East hotel investment booms (page 3 of 3)

Another chain was brought in to take over the management. But this chain recently decided to pull out, citing factors such as delay in meeting objectives. Recently, the owners of the property decided to renew their ties with the previous hotel chain.

In Dubai, a leading European hotel group saw the property owner reneging on the terms of the contract, leading to the former's exit. According to sources, legal action is pending in the UAE courts on the issue. It looks like both parties are in for a long battle.

Saudi Arabia is another interesting case in point. With the authorities' historical reluctance to open up the country to overseas travelers - not to mention the many restrictions that are placed on entering the country - the kingdom does not fit the profile of a natural tourist destination.

However, the authorities do believe they are on to a good thing by targeting the devout Muslim traveler, especially to destinations such as Mecca and Medina. Another potentially lucrative source of tourist dollars would be Gulf travelers, who have recently demonstrated a clear preference for regional destinations.

Epsom believes that the kingdom has lots of potential. "Saudi Arabia has a huge and constantly growing domestic tourism market," he says, "and is cleverly developing tourism from outside, through the religious visitors who come to visit the holy sites. We witnessed an increase of 4.5 percent in year-on-year arrivals from the Middle East. Some foreign companies are being allowed to develop its mineral wealth. These factors will certainly ensure growth in the hotel business."

So what should the prospective investor in a hotel project in the Middle East do? Refrain from taking the plunge on the grounds that there is an overcapacity problem in the sector? Or should he take a tip or two from Prince Walid bin Talal, who did not become one of the richest men in the world by taking inspired guesses? The next couple of years should provide some clear answers.