Peter J. Cooper’s Weblog

November 11, 2008

Silver still buys a good dinner in ancient Petra

Filed under: Gold & Silver, Travel, US Dollar — peterjcooper @ 3:42 pm

img_1453The other day I was reading some article which claimed that silver could no longer be considered a currency. Yet silver certainly was a currency in ancient and more modern times, and has retained its value.

Last weekend my wife and I decided to visit Petra, the abandoned hidden city in Jordan with magnificent facades carved out of rose-colored sandstone rocks. Marc Faber had been there recently and found the place inspirational.

Once a capital city of 200,000 souls Petra is accessed through a very narrow pass with sandstone walls up to 100 meters high called The Siq. After a kilometer of narrow pass you reach a monument known as the Treasury, although whether it was ever used as a repository for Nabatean silver money is not certain.

Beyond the Treasury the valley of Petra stretches out over several square kilometers. We took a donkey to the top of another pass to visit the monastery, not a form of transport I would recommend, particularly when your wife’s donkey is in front and has an urgent call of nature. We walked the 1,000 steps to the Place of High Sacrifice the next day.

No silver

All the time in Petra I kept asking local traders if they had any silver. A few hopefully offered me bronze coinage which I refused. But on the climb to the Place of High Sacrifice a bedouin pulled out a shiny piece of original Nabatean silver to sell to me.

That night in the Petra Marriott we sat down to dinner and it occurred to me that 2,000 years ago the same silver coin would have probably bought a good dinner, and was still worth about the same. That is what is precious about precious metals, they keep their shine and their value.

Of course, I am guessing really, who knows what the Petra Marriott would have charged 2,000 years ago for dinner! But the point is that silver still works as a store of value, and if that bedouin had been a time traveller I could have been functioning as an exchange shop.

My wife also bought some silver jewelry. But that was the only silver coin I found in the whole of Petra during my stay. The Nabateans were once the richest tribe in the Middle East but even they seem to have run out of silver coins these days.
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October 18, 2008

Visit Rome to connect with the past

Filed under: Hotels, Restaurants, Travel — peterjcooper @ 1:08 pm


Rome is a city blessed with a myriad of attractions from the ancient ruins of the forum to complete buildings from antiquary like the Pantheon, world-beating museums and the very best designer shopping. The Storico Centro district is also amazingly compact with the Vatican City and the basilica of St Peter’s as a natural extension.

Emirates Airline has direct flights to Rome and there is a fast train link to the centre, or a taxi at around $150 return. But the city does not have many truly five-star hotels and apartment rental can offer a higher standard of accommodation.

An Internet search turned up our one-bedroom apartment in the Via Cartari owned by the friendly Giampaolo whose growing family has now moved to something larger outside the centre. It is a useful tip in choosing an apartment to always look for a place in which the owner previously lived.

Five star apartment

This generally means a high standard of fit-out with genuine home comforts. We were very lucky. Giampaolo’s 650 sq ft apartment’s interior had been fashioned by a designer to include a built-in hifi and flat-screen TV, custom-made furniture, a four-poster bed, quality kitchen and marble bathroom.

Moreover, the location was excellent being about mid-point between the Pantheon and the Vatican City, meaning that all Rome’s top attractions are just a maximum of 20 minutes walk away or an inexpensive taxi ride if you are feeling tired or lazy.

Arab visitors love to join Italians on their evening promenades through the city. Everything is open late in Rome, and al fresco dining at restaurants is normal. It does pay to consult a guide-book however, as restaurant prices do not always reflect the quality of the food. Giampaolo left us a few good restaurant suggestions, and business cards for such must eats as ‘the best ice cream in the world’.

Even those who are not normally impressed by architecture and culture tend to fall for Rome. Whatever your religion the cathedral of St Peter’s in the Vatican City is arguably the world’s most richly decorated building, and we climbed to the top of the dome, albeit paying a small supplement for a lift up to half-way.

Historical city

This is, of course, relatively modern history for Rome. Visit the coliseum and imperial forum and you are transported back 2,000 years. Better still is the Pantheon which is the same age and whose magnificent concrete dome has survived intact, thanks mainly to its conversion to a church in 600AD.

To see a full-size imperial bronze statue on horse-back, the only one to survive from antiquary, visit the superb Capitoline Museum, one of the oldest in the world and founded 500 years ago and marvel at Marcus Aurelius.

For the work more modern masters like Michelangelo and Bernini then you need to organize a tour around some of the 900 churches in Rome which have been great patrons of art over the centuries. Rome is an extremely grand, luxurious and hospitable city and few visitors go home disappointed.
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May 21, 2008

The real reason why Warren Buffett is shopping in Europe

Filed under: Travel, US Stocks — peterjcooper @ 12:14 pm

Some say this is to acquire revenue streams in hard currency. All right but surely a far more obvious reason for Buffett to be buying companies in Europe is that he wants to move away from the devaluing US dollar. For if the dollar continues downwards for the next couple of years that will deliver Berkshire Hathaway a devaluation bonus on its European assets.

You have to admire this master tactician as he covers his tracks. He tells people not to time markets while doing it himself to consummate effect: you do not enter the silver or bond markets without a very keen sense of timing.

Perhaps then it is not unreasonable for Buffett to be talking the dollar up while placing his money into companies using other currencies because he really thinks the greenback is heading down.

In life, politics and investing what is the simplest explanation is usually true. But what should the Saga of Omaha be shopping for in Europe?

I would never dare to advise my wife on what shoes to buy so why try to second guess an expert? He’s going to doubtless spot value where nobody else does! Swiss watches perhaps because they never go out of fashion and have fat profit margins.

But then he bought US railroads as a spin on the oil price so expect some surprises. However, this will be a distraction from the true objective which is to place a buffer under Berkshire’s profits as the US dollar falls.

Expect a rough couple of years for the greenback with even lower interest rates to offset a Wall Street crash to greet President Obama and the economic mess the current administration leaves behind. Dollar devaluation will eventually bottom out but Buffett wants some insurance, and that is what he will buy in Europe.

May 7, 2008

Meeting the CEO of Dubailand’s $54bn Bawadi hotel strip

Filed under: Dubai Property, Travel — peterjcooper @ 8:07 am

Donald Trump loves Dubai and has his own projects underway but Trump is one of the smaller developers in town. It was a pleasure to meet one of Dubai’s upcoming young national leaders this week, Arif Mubarak, CEO of Bawadi, the $54bn fully air-conditioned hotel strip being developed in the desert as an Arabic Las Vegas but without the gaming.

 

Last year the project expanded to 51 hotels with 60,000 rooms and 1,500 food and beverage outlets with massive convention centres, theatres and perhaps inevitably the world’s biggest concentration of retail space under one roof.

 

Bawadi is at the forefront of the Dubai Government’s integrated tourism strategy to expand hotel rooms in the emirate from 47,000 today to 141,000 by 2015.  Its centerpiece will be the world’s largest hotel, Asia-Asia is now scheduled to open in 2012. It will provide 6,500 rooms, and a total of 7,500 rooms will open in 2102 which includes the Desert Gate Hotel at the start of the strip set to open at the end of 2011.

 

There will be 40 million sqft of retail space in Bawadi formed into three areas: the Bawadi-Al Ghurair joint venture; the Bawadi-Emaar joint venture; and a third not yet announced. Aside from being totally linked by air-conditioned walkways the zone will have its own personal rapid transit system. It will be the largest area of retail space in the world under one roof.

 

Like most Dubai Government officials Arif is a highly personable character with a quick-fire response to questions, and one imagines operational problems. It is this approach that has endeared Dubai to many investors. I am sure Arif would have won Donald Trump’s game show ‘The Apprentice’ but then the property portfolio under his control is bigger than all the real estate projects ever handled by Mr. Trump.

 

This is a formidable responsibility and the Dubai Government is going to be the main driver behind Bawadi. Arif told me: ‘This allows us to set the benchmarks and standards for a fully intergrated hotel community in a way that just selling plots of land would not permit. We will be the investors in the three major hotels and the infrastructure for the 10-kilometre long project, and 40 per cent is ours as the master developer. But this is a different business model to other projects in Dubai. Nobody will be able to resell unless their hotel is completed.’

 

He is also deeply defensive of the project’s location in the Dubai desert: ‘Bawadi is not out in the desert. It is only 15 minutes from the beach in fact, so I don’t think you can really compare Bawadi to an in-land desert city like Las Vegas. It will be a family destination close to a large residential area and theme park zone with many world-class attractions such as 6 Flags, Dreamland, Universal Studios as well as the Sports City and MotorCity. For shoppers there will also be the Mall of the Emirates and Dubai Mall nearby.’

 

This is clearly a considerable strategic investment in the future of Dubai tourism, and it was hard not to warm to the strength and depth of this commitment. I liked his final comments:

 

‘Bubbles have been a topic of discussion in Dubai for the past 20 years and we are still waiting for it. I think there is no sign of any such thing. Dubai has a track record of commitment and delivery, albeit maybe with a slight slippage in time.

 

‘As far as Bawadi is concerned the project is a sign of the success of the Dubai hospitality and tourism sector, and a strategic initiative of great importance. It is to be a whole new experience for tourists with one hundred entertainment venues, from convention centre shows to music in hotel lobbies and live theatre.

 

‘We see 300 million people living within an hour-and-a-half flying distance from Dubai, and Dubai is the only entertainment hub in the region; and we have many people coming to visit from a lot further away. So this is a sustainable business model with a great future.’

May 6, 2008

The Westin Dubai open, new hotel project launches slump

Filed under: Dubai Property, Travel — peterjcooper @ 7:48 am

The super deluxe Westin Dubai opened last night with a champagne reception and concert by the UAE Philharmonic Orchestra with special guest singers. But the Arabian Hotel Investment Conference this week saw a complete slump in new hotel projects in Dubai, with only one budget easyHotel launched in the Jebel Ali Free Zone.

 

The Westin Dubai is the latest addition to the glittering array of up market properties and its translucent interior design by Tuscan lead designer Habitalia Design Group in association with Studitalia is a triumph.

 

As is often the case in Dubai the designers have been able to work unmolested by a client, in this case the Dubai Government, and have delivered something really quite exceptionally beautiful: modern but not minimalist, rich but comfortable and ultra cool.

 

On the same day the Arabian Hotel Investment Conference wrapped up it marathon three-day sessions with yet another record for attendance this year. However, the event was overshadowed by the global credit crunch which has slashed hotel transactions by 60 per cent with the biggest deals being axed by private equity groups unable to raise finance.

 

But even the Dubai hotel boom has run out of steam this year. There was only a small easyHotel launched, albeit part of a promised big chain in the region. Last year the Dubai Government’s Bawadi doubled the size of its 10-kilometre desert hotel strip from 31 to 51 hotels and upped the investment from $16.5 to $55 billion.

 

Perhaps there was just no way to top that! But it was intriguing to attend a session entitled ‘Will the Dubai hotel bubble burst?’ Everybody argued that it would go on for years, not making the obvious observation that in terms of new hotel project launches the bubble has burst.

 

Of course there is going to be many years of new hotel openings like The Westin Dubai, a project where the owner will get its investment back within two years, and most of the bookings are already in hand.

 

This is what has fired the hospitality boom in Dubai where hotels currently have the highest occupancy levels in the world and rates to match. The economics of the hotel business are a license to print money with Dubai the flavour of the month for global business and tourism.

 

However, with plans afoot to raise the number of hotel rooms from 47,000 to 141,000 by 2015 this is going to feel like a hotel boom for many years to come, even if the new hotel launches have faded away. That will make the industry trade fair, the Arabian Travel Market which opens today a continuing success.

May 2, 2008

Can Dubai accommodate 15m tourists by 2015?

Filed under: Travel — peterjcooper @ 1:21 pm

Skeptics have long found themselves challenged by the ambitions of Dubai which often later dumbfounded critics. Will it be the same story for tourism? But then Dubai is already a bigger tourism destination than the Land of the Pharaohs, and the hotels of the future are coming out of the ground.

 

Next week Dubai will host two of the biggest events of the regional tourism sector: the Arabian Hotel Investment Conference and the Arabian Travel Market. The AHIC is a huge trade show for the sector while the ATM is a conference for hotel investors and operators.

 

The AHIC is bigger and better than ever this year, and shows no sign of becoming less popular despite the high attendance fees. For in the current climate owning a hotel in the Middle East has become a license to print money with occupancy levels at the highest in the world and revenue per room up by more than 15 per cent yet again in the past year.

 

This happy economic circumstance has produced a virtuous circle with rising profits funding the construction of ever more exciting lavish hotels and stimulating further demand.

 

Two upcoming entrants to the market are good examples. The Westin Hotel will open its doors to guests from the ATM for its first evening on May 5th. On view will be the fabulous new public spaces designed by the Italian firm

Studitalia Décor showing great Italian flair with a play on colours, textures, lighting and display art.

 

Then in September the 2000-room Atlantis Palm from Sun International and Nakheel will dazzle the city with its amazing water park attractions, set to include a pod of imported bottlenose dolphins. Both hotels are reported to be already booked out. But is that so surprising? Italian super-cool design on the Jumeirah Beach and a world-class mega hotel on the Palm, these are not everyday hotel offerings.

 

There will be no compromise on quality here to meet tighter budgets in a competitive market. Rather Dubai is realizing that it has to go the extra mile to stay on top of its own success.

 

In August the first of the Emirates A380s will land in Dubai and quickly enter active service on either the New York or London routes. But this is a vital part of an integrated tourism strategy. The 467 seats on the 58 super jumbo A380 aircraft on order will be essential if Dubai is to handle 15 million tourists per annum by 2015.

 

More hotels will be needed too, and there is a pipeline of hotel developments designed to more than double the current room count by that date, including the biggest hotel in the world, the Asia-Asia in Dubailand.

 

Build and the tourists will come. Hoteliers presently moan that they do not have enough rooms to accommodate all the people that would like to stay in Dubai. And each of the major chains has massive expansion plans in place with their owners only too happy to invest in another money spinner.

 

The destination is also investing to provide more for tourists to do. There will be three times as much floorspace in shopping malls by 2010. The three palm island projects are due to add many more facilities for tourists.

 

Then, of course, there is Dubailand. Phase one of this theme park, almost as large as the existing metropolitan Dubai will open in December 2010. That will include the world’s largest shopping mall, Sports City, Motor City, the global village and Universal Studios.

 

Dubai will never come close to Egypt for history but it will be able to keep pace with fun destinations like Australia’s Gold Coast for family entertainment and an aquatic lifestyle. But what could go wrong and upset this vision of Arabian paradise?

 

If you catch tired hotel operators coping with 100 per cent occupancy, they will sometimes whistfully recall the quieter times after the start of the Second Gulf War. That was over five years ago, and the hotels have been busy ever since. But war or terrorism are the twin evils that tourists quickly run to avoid.

 

A more subtle danger is the onset of a global recession, something the IMF now puts at a 25 per cent chance for 2009. People are always very reluctant to cancel their holidays, but executives losing their jobs as a result of the ongoing financial crisis really have no choice. There is a tendency to cut back and retrench when times get tough and save money.

However, a global recession would likely be characterized by an even lower US dollar, and that would make Dubai holidays even better value for the main source of clients in Europe. Indeed, the Dubai travel and tourism sector has probably not seen the end of the good times just yet, and 15 million tourists in 2015 looks a practical target.

April 30, 2008

Emirates Airline’s 62% profit hike is a proxy for Dubai

Filed under: Dubai Property, Travel — peterjcooper @ 1:45 pm

The performance of Emirates Airline is an excellent guide to the underlying performance of business in Dubai. The airline is worth around $6 billion to the local economy. The announcement of record profits, up 62 per cent to $1.4 billion in the year to end of March, is a reflection both of the oil boom in the Gulf States and the dynamism of Dubai as a destination.

 

Emirates is also an extremely well managed airline, and now ranks among the top five most profitable in the world, giving the carrier an enviable ability to expand its fleet to become one of the world’s biggest long-haul carriers, perhaps one day the largest of them all.

 

For Emirates has a total of 182 aircraft on order costing $58 billion, including 58 of the giant new super jumbo A380s from Airbus. The global financial crisis has apparently had ‘no impact’ on funding this acquisition program, Gary Chapman, President of Group Services and Dnata told me this morning.

 

Indeed, to use an unforgivable pun, there has been a flight to quality with financial institutions as keen as mustard to fund hard assets with a ‘solid’ airline.

 

‘Solid’ was the word Emirates Chairman and CEO Sheikh Ahmed bin Saeed Al Maktoum used to describe the financial condition of his airline. ‘Those on the edge will go down’ he said of the prospects for certain financially less well endowed competitors: business-class only Eos went yesterday. Emirates has $3.8 billion in cash and is paying its shareholder Dubai government $275 million as a dividend.

 

It is only too true that if the Emirates business model was failing then that would mean the whole aviation industry stood on the verge of annihilation. But with 80 per cent seat capacity it is often impossible to find a seat on many Asian routes, given that the spare capacity tends to only be for newer destinations.

 

‘No decision’ has been made about an initial public offering for Emirates Group, except that an indication that around 25-30 per cent of the company would be sold in an IPO if it happens, said His Highness.

 

He even brushed off a question about the possible impact of $200-a-barrel oil on Emirates: ‘It will affect some airlines - a solid airline can absorb high fuel prices.’

 

Emirates will launch eight new destinations this year, introduce the A380 and expand capacity on many routes. There will be 163 aircraft in the fleet by 2010.

 

‘I believe the threat of a global economic downturn will be offset for Emirates by the boom in the Middle East, especially in the thriving travel industry of tourism and commerce,’ noted High Highness. None of this must be very happy reading for his competitors but this is also a proxy for the strength of the Dubai economy.

McDonald’s faces Middle East crisis

Filed under: Media, Travel, Uncategorized — peterjcooper @ 9:15 am

A 40 per cent increase in costs and surging local rental inflation means that McDonald’s will shortly be unable to contain the prices of its burgers in the Middle East and hike prices for the first time in two years.

 

McDonald’s empire in the region is strongest in the UAE where each of its 5.1 million residents eats an average of five sandwiches per annum. The local chain has 52 outlets and rings up over a million transactions a month.

 

But food price inflation is now rampant in the UAE where the local currency is pegged to the US dollar despite being in an economic boom rather than a slump. That means imports from non-dollar countries are rising in price as the US dollar falls in value.

 

However, McDonald’s is not slowing its expansion and local franchisee Emirates Fast Food Company told Gulf News it will open ten new restaurants this year and invest a total of around $7 million.  

 

Indeed, the food inflation crisis is apparently not going to stop expansion to between 100 and 150 restaurants in the country which is already suffering a diabetes epidemic among nationals.

 

Hopefully McDonald’s will continue to develop healthy eating options such as the McArabia sandwich, featuring Arabic flatbread, chicken or lamb and salad.

April 27, 2008

Emirates A380 to land in New York this fall

Filed under: Travel, Video — peterjcooper @ 12:05 pm

With seats full on its three-flights a day to the Big Apple, Dubai based Emirates Airline will land the first commercial A380 flights into New York from October 1 when the winter schedule begins. Watch this video for a preview of this amazing aircraft flying past the Burj Al Arab.

Profits set to take-off again at Emirates Airline

Filed under: Media, Travel — peterjcooper @ 11:49 am

On Wednesday this week the world’s fastest growing airline is set to report its annual profits in Dubai. Emirates Airline is expected to post another record year with profits up at least a third to more than $1.3 billion.

 

Having quietly tripled its Dubai to New York service to three flights a day, Emirates is close to capacity on the transatlantic route to the Big Apple. Officials say that the answer is it new 457-seat A380 superjumbo from Airbus which will operate on the winter schedule from October 1.

 

The first Emirates A380 is scheduled for delivery this August and is most likely to end up on the transatlantic or London route, Emirates veteran Vice Chairman Maurice Flanaghan told a recent television interview.

 

Emirates keenly awaits delivery of the first of its fleet of 58 giant A380s, the largest A380 order placed by any airline, and intended to achieve a step-change in operational efficiency and yet higher profits.

 

The 100 per cent Dubai Government owned carrier has a fleet of 115 airplanes which will rise to 200 by 2012 with 22 planes delivered this year alone. Last week Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman and Chief Executive of Emirates Group said the airline will have more than 450 aircraft in its fleet by 2020.

‘Emirates has been doubling its size every three or four years since it started. I think we will continue with that kind of growth,’ he told a session at the World Travel and Tourism Council Summit. Emirates Airline has 243 planes on order worth around $60 billion.

Dubai is following a vertically integrated tourism development strategy, alongside breakneck economic expansion, and is planning to receive 15 million visitors a year by 2015, up from seven million last year. And to achieve that target Emirates is going to need all those aircraft.

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