• LUVing emerging markets

The currently fashionable thesis about economic recovery (at least this week) is that Europe will suffer a drawn out L-shaped recovery, the US a U-shape and Asia and most other emerging markets a sharp V.

If this LUV recovery plays out in this way then Dubai-listed Kingdom Hotel Investments is set to be one of the core beneficiaries in the hotel sector.

Last week KHI reported quarterly results and said despite the tough outlook, hotel operations remained "profitable and cash generative".

Consolidated revpar across the company was -7% during the third quarter on a currency neutral basis helped along by Ramadan and the Eid Al Fitr public holiday falling during the 12 weeks.

Operations in the Middle East saw a revpar decline of -12% – entirely as a result of very poor trading in Dubai. For example the Movenpick Bur Dubai saw revpar down 46% compared to the same period last year – hit by both occupancy and room rate falls. This poor performance completely overshadowed the 33% revpar gains made by Movenpick Beirut.

Also performing strongly is Sub-Saharan Africa. The Kenyan renovation programme continues to reap rewards – driving revpar by 64% and occupancy by 17% ahead of the same period last year.

The Asian operations more accurately reflect trading in other groups around the world with revpar down -23% across the portfolio. Room rates remained weak at the Four Seasons Langkawi while the terrorist attacks in Jakarta have understandably hit demand across the city.

In terms of expansion, Kingdom delivered three new Four Seasons Private Residences in Mauritius for a value of $12.2m for which KHI is attributed 50% and is scheduled to complete construction of the Four Seasons Private Residences at Marrakech in the first quarter of 2010 and the hotel in mid 2010.

The Four Seasons Hotel, Beirut is scheduled to open on January 10 next year and construction is underway in Accra, Manila and Seychelles.

Meanwhile, the separate Kingdom Holding Company, owned by Saudi Prince Alwaleed bin Talal, had earlier seen third quarter profit fall 54%. Losses from its hotels was a major contributor to this decline.

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