CATALYSTS OF CHANGE UNVEILED AT AHIC 2017
Now in its 13th year, the annual knowledge and networking platform for the global hospitality investment community, AHIC, attracted more than 700 delegates keen to better understand regional hospitality market fundamentals, opportunities and investment potential.
The economy and mid-market hotel segment was identified as presenting a significant opportunity for hotel owners and operators alike at the Arabian Hotel Investment Conference 2017 (AHIC), held at Madinat Jumeirah in Dubai from 25-27 April, 2017 and organized by Bench Events and MEED.
Expert speakers also identified a gap in the market for more experiential accommodation and entertainment attractions, especially in Dubai, as the market continues to diversify its hospitality offering.
In an exclusive presentation, STR managing director Robin Rossmann provided insight into the midscale pipeline and performance in the GCC, revealing that mid-market supply is set to match luxury in the GCC by 2021. According to STR, the ‘Midscale’ has out-performed the ‘Upscale & Upper Mid Classes’ and ‘Luxury & Upper Upscale’ classes since 2011 across the GCC. Rossmann observed that midmarket hotels are under-penetrated and pointed to significant growth potential underpinned by growing intra-regional travel and demand for affordable travel.
Commenting on the trends, Jonathan Worsley, chairman, Bench Events, board director, STR and co-founder of AHIC, said, “The mid-market has been discussed at AHIC for several years, but in 2017, we have witnessed a significant shift as the compelling investment model for lower development costs and higher, quicker returns has put the mid-market in favor. It was fascinating to explore the long-term view, looking at costs, rate strategy and returns with our many speakers and sponsors.
“Testament to the potential for the midmarket in the Middle East is the launch of Us-based hotelier Choice Hotels International in the UAE and Saudi Arabia, with a pipeline of seven signed hotels already and many more to come. We were delighted to welcome Stephen P. Joyce, president & CEO, Choice Hotels International, Inc, as one of our keynote speakers to gain insights from one of the world’s leaders in the midmarket hotel industry.”
Commenting on the company’s expansion, Stephen P. Joyce said the growth of the middle class and demand from travelers for quality, midscale accommodation had fueled Choice Hotels International’s entry to the Middle East with three of its brands: Clarion, Comfort and Quality. “Historically when you look at this region and what people considered moderate, they kind of pull the chandelier and pull the marble and they don’t change the operating model,” Joyce said.
In a dedicated plenary panel session focused on investment in the mid-market, Elie Younes, vice president business development MEA for The Rezidor Hotel Group, echoed this. “We are very active in the midscale market in the Middle East, with 20 percent of our properties within that bracket. However, we have more in the pipeline along with serviced apartments. Operational efficiency starts at the development of the product; you may not need a comprehensive back of house and you can reduce the staff-to-guest ratio,” said Younes.
The future of Dubai requires out-ofthe-box thinking
In a separate session focused on Dubai and The Next Five Years 2017-2022, Gurdish Bassi, Economist at GRMC Advisory Consulting, revealed insights into tourist spend patterns. He predicted that total tourist spend in Dubai is expected to reach AED 144 billion by 2021, compared to AED113 billion in 2016 and that the largest spending increase would be in the entertainment sector. Bassi said, “Shopping malls may not have it all; entertainment and experiential concepts will capture a significant proportion of total spend.” Klaus Assmann, vice president – hospitality and retail, Dubai Parks and Resorts, added his views on the further potential for Dubai.
The conversation at AHIC centered around the theme Catalysts of Change, with technology and digitization highlighted by many speakers as having a major impact on the future of the hospitality industry and also featured discussions centered around topics including asset management, overseas investment, F&B, brands, third-party management and alternative investment models.