Does the UAE need to build more mid-range hotels?

The Middle East’s hospitality sector is bustling with activity, but are local developers adapting to current trends?

A long walk: experts say Dubai will have to develop its mid-market hospitality sector to meet future demand.
A long walk: experts say Dubai will have to develop its mid-market hospitality sector to meet future demand.

Up to 80 professionals took to the stage at The Hotel Show 2015, held in Dubai between 28 and 30 September, to discuss the future of hospitality in the Middle East. Experts from the region’s tourism and hospitality industries convened to participate in various panels at the exhibition, where themes such as affordable hotels, sustainable initiatives, and 3D printing were discussed.

The annual revenue of hotels in the UAE by 2019 is expected to hit $10.9bn (AED41bn), a sizeable increase from 2013 figures, worth $5.9bn (AED21.6bn). Visitor attraction revenues are also forecast to double from $521m (AED1.9bn) recorded in 2013, to over $1.2bn (AED4.4bn) by 2019, according to figures released by Euromonitor International on 28 September, 2015.

This year alone, UAE hotel revenues are predicted to reach $7.3bn (AED26.8bn), while visitor attraction revenues will be worth $638m ($2.3bn) in the year. The UAE leads the MENA market in terms of hotel room revenues, with over three times the amount recorded for Saudi Arabia and Egypt, the report added.

Clearly, hospitality is reaping the rewards of Dubai’s immensely successful tourism strategy, and the trend looks set to continue upwards.

In a speech delivered on the first day of The Hotel Show, DTCM’s Kazim said: “A total of 11 properties have opened [between] January and July 2015 in Dubai, adding to the existing 95,000 keys already available in [the city].”

Kazim’s speech was followed by the ‘Mega Trends’ panel, where Caroline List, sales manager at Tophotelprojects, said: “There are 267 hotel projects currently under construction in the Middle East, whereas an additional 98 projects are set to open shortly.”

List was accompanied by Martin Cooper, director of real estate services and head of real estate consulting at Deloitte.

“The demand and supply [of hotels] is at an interesting stage,” Cooper remarked.

“We currently have a scenario where supply is outpacing demand [by] around 2%. This is because of the projects under construction that are nearing handover and beginning operations.”

Hotel architecture was also discussed at the show. Salim Hussain, lead design architect at BSBG; Andre Meyerhans, principal of Fischer & Meyerhans Architects; Chris Browning, director of Norr Group Consultants; and Holley Chant, executive director of corporate sustainability at KEO, were part of a panel, titled ‘Architecture Of The Future - How Far Can It Go’, on the exhibition’s first day.

The group kicked off with an analysis of hotel designs of the future, and whether cheaper accommodation would be necessary in the Middle East as the region readies itself to host global events, such as Dubai Expo 2020 and 2022 FIFA World Cup Qatar.

Dubai Expo 2020 expects to attract up to 25-million visitors, and at least 170 hotels are under construction in the country, presumably in anticipation of the world event. The UAE has the highest number of ongoing hotel projects in the Middle East and Africa region, followed by Saudi Arabia, Turkey, and Morocco.

Tophotelprojects, a provider of global hotel data, stated the UAE has 63,970 rooms under construction, across 119 hotels in Dubai and 26 in Abu Dhabi. No details were provided about how this number splits across luxury and affordable hotels.

It would be justified to presume, however, that developers will expand into the affordable hospitality segment, much like they have begun to within the residential sector.

Commenting on the growth of niche hotel outfits, Norr’s Browning said: “We see that a lot is happening in the hotel market.

“Micro hotels are really emerging. We’ve also got companies like Snoozebox [an English portable hotel company which uses recycled shipping containers], and pop-up hotels.

“It will be interesting to see if this type of accommodation can take off here [in the Middle East], and if this region is prepared to accept that,” Browning added.

The panel also discussed whether Dubai Expo 2020 guests would prefer high-end hotels, such as Atlantis the Palm, or if developers will be inclined to dabble in temporary hospitality options.

BSBG’s Hussain said: “When visiting Dubai, people’s level of expectations is much higher than in other cities. There is an obsession with Dubai Expo 2020.

“No doubt it is a big event, and it is important how we will get there, but also what we will do afterwards,” Hussain added.

Discussing sustainable design, KEO’s Chant said hotel operators in the future will insist on designs that “enhance the health and well-being” of their guests.

“We are not a static planet anymore. We need to consider the impact of design. Notions of water conservation, ten years or five years ago, were unusual, but they are not unusual anymore,” Chant continued.

“Most hotels’ approaches have sustainability policies and they are thinking green, so there is an opportunity for new sustainability initiatives.”

She added: “I am particularly interested in health and wellbeing. If a person goes to a hotel and wants to spend two hours or so in a spa or in a gym, it is important to ensure they are not inhaling harmful chemicals, which are affecting hormones or acting as [health] disruptors”.

Whilst the panel agreed that the UAE’s government is working hard to ensure the country’s sustainability levels are on par with global standards, Chant remarked that accessing eco-friendly materials specified by architect briefs is “not always easy” in the region.

She also discussed landscaping and its impact on improved user experience. “There has been lots of research in places like Harvard [University] into how exposure to nature can positively affect human wellbeing,” she noted.

Experts at The Hotel Show also agreed that Dubai is now ready to explore the boutique hotel sector, with some areas of the Emirate already ripe for this niche.

Philippe Harb, CEO of One to One Hotels & Resorts, said there is “massive” potential for boutique hotels in the city, and that “defining factors need to be in place to differentiate a boutique hotel from a mid-market one”.

The cost of building a hotel in Dubai can be a challenge, Harb continued, right from sourcing land to building and operating, according to Hotelier Middle East.

“Some of the hotels in Dubai’s more historic areas of Bur Dubai and Deira have the potential to be refurbished and rebranded in to boutique hotels,” Harb added.

“That way they save on costs of buying land and building a new structure.”

Speakers at The Hotel Show also addressed Dubai’s – and the wider Middle East’s – need for affordable hotels.

The ‘Development and Growth of the Mid-Range Market’ panel, held on the final day of the exhibition, saw industry experts discuss how Dubai will formulate its mid-market hospitality strategy.

Daniel G During, principal and managing director of Thomas Klein International, echoed Harb’s views on refurbishment and rebranding.

According to Khaleej Times, During said “there are a number of opportunities in the UAE where the history and the culture of a building can be preserved while turning it into a budget hotel”, adding that repurposing old buildings is a global trend with which Dubai is yet to catch up.

During also pointed out a lack of hotels in Dubai that can support adventure and budget tourism.

“If you are a diver or mountaineer travelling to the UAE on a budget then there aren’t many options available to you,” he commented, according to the report.

“You can either pitch a tent somewhere outside, or you go to a luxury resort; there is no middle ground and this needs to change, since there are a growing number of travellers that are looking to experience outdoor activities.”

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