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UAE and Saudi Arabia to lead GCC's luxury hotel market by 2022

Recent market developments suggest that increased hotel construction activity is positively impacting construction businesses in the Emirates

The launch of "iconic properties" such as Burj Al Arab redefined luxury tourism in the GCC, an official from the ATM exhibition team said.
The launch of "iconic properties" such as Burj Al Arab redefined luxury tourism in the GCC, an official from the ATM exhibition team said.

The UAE will lead the delivery of luxury hospitality products in the GCC up to 2022, followed by Saudi Arabia. 

Up to 73% of existing luxury hotel stock is based in the UAE, as is 61% of the Gulf's total luxury hotel pipeline. 

Growth in the Emirates' hospitality segment – including both luxury and mid-market properties – is supporting the regional construction sector. 

UAE-based contractor, Dhabi Contracting revealed that it was looking to build a seven-star hotel in Ruwais, in the Western Region of Abu Dhabi.

Bishoy Edward, chief operating officer of Dhabi Contracting, told Construction Week: "We have the land, and the design, which [was prepared] by Aecom, has been approved.

"The project is now being reviewed by the [Abu Dhabi] Urban Planning Council," Edward told Construction Week in January. 

In the same month, UAE-based contractor, ASGC, revealed it had been appointed as the main contractor for the 25hours One Central hotel project. 

Located in Dubai World Trade Centre’s One Central development, the Accor-operated hotel will include 434 rooms across more than nine floors, and four basements.

The hotel is due for completion in 2020, according to a statement by ASGC. 

However, Saudi Arabia is expected to provide "strong competition" to the UAE's luxury hotel market, with the kingdom due to "witness the most significant increase in luxury hotel supply" by 2022. 

The kingdom's luxury hospitality market is expected to expand at a compound annual growth rate (CAGR) of 18%, starting in 2018. 

READ: More than 80 hotels set to open across Saudi Arabia in 2018

Meanwhile, the UAE's and Bahrain's luxury hotel sector will respectively report a CAGR expansion of 10% and 9%, while Oman and Kuwait's high-end hotel markets will post a CAGR of 11%. 

Luxury hotels have increased three-fold in the Gulf over the past decade, with 95% of these properties managed by international operators. 

READ: Havelock AHI completes fit-out of 284-key Four Seasons hotel in Kuwait

According to the research, compiled by Allied Market Research and published by Colliers International, six opportunities are available for development in the GCC’s luxury segment.

These include the introduction of boutique hotels comprising less than 80 keys; designing products that offer privacy and exclusivity; luxury resorts that cater to the high demand for wedding destinations; developing "iconic" properties in prime locations; and nature and heritage concepts such as eco-lodges and 'glamping', a portmanteau of 'glamour' and 'camping'.

This data was revealed ahead of Arabian Travel Market (ATM) 2018, which is due to be held at Dubai World Trade Centre between 22 and 25 April this year. 

Commenting on the research's findings, Simon Press, senior exhibition director of ATM, said the launch of "iconic properties" such as Burj Al Arab (pictured) and Makkah Palace "changed the face of luxury tourism" in the region. 

READ: Building and transporting the Burj Al Arab Terrace

Press continued: "The opening of such iconic properties as Burj Al Arab in 1999 and Raffles Makkah Palace in 2010, changed the face of luxury tourism in the GCC, as well as the skylines of its major cities.

"The region may be working to attract a wider visitor mix, but its commitment to luxury hospitality and tourism will not take a backseat anytime soon." 

Spend on luxury products from the Gulf's largest source markets – China and India – is also said to be on the rise, driven by a concurrent increase in the prominence of high-net worth individuals (HNWIs) in both countries.

READ: World's tallest hotel to open in Dubai this year

In 2017, 35% of the UAE's hotel pipeline comprised luxury projects, with most properties located in Dubai.

The figure was significantly higher than corresponding luxury projects recorded against total hotel numbers in Saudi Arabia (14%), Kuwait (20%), Bahrain (19%), and Oman (11%).

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Construction Week - Issue 761
Mar 21, 2020