DUBAI NEEDS TO BRIDGE THE GAP BE­TWEEN LUX­URY AND MID-MAR­KET HO­TEL SEC­TOR

Hotelier Middle East - - EVENT REVIEW -

Speak­ing dur­ing a panel dis­cus­sion on ‘Bal­anc­ing Sup­ply and Bridg­ing The Gap in the Mar­ket’ at the ninth an­nual Hote­lier Mid­dle East Great GM De­bate held in Dubai, Elie Milky, vice pres­i­dent busi­ness de­vel­op­ment Mid­dle East, North Africa and Turkey for Radis­son Ho­tel Group, said one of the rea­sons own­ers aren't con­vinced by mid-mar­ket ho­tels is the price of land.

“Dubai's lux­ury to mid-scale ho­tels ra­tio is above 50% cur­rently but in de­vel­oped cities like Paris the ra­tio is some­where be­tween 2030%,” Milky noted.

Agree­ing with him Lau­rent A. Voivenel, se­nior vice pres­i­dent, op­er­a­tions and de­vel­op­ment – Mid­dle East, Africa & In­dia, Swiss­bel­ho­tel In­ter­na­tional said: “there needs to be some sort of in­ter­ven­tion from the au­thor­i­ties re­gard­ing land al­lo­ca­tion be­cause in ar­eas where mid-mar­ket ho­tels should be to at­tract in­vestors, the cost of land is pro­hib­i­tively high or not avail­able for bud­get ho­tels.”

Voivenel added that, “There are many fac­tors that make mid-mar­ket ho­tels a lu­cra­tive in­vest­ment op­tion. The most im­por­tant is that de­spite the strong de­mand only lim­ited bud­get ho­tels in­ven­tory is en­ter­ing the mar­ket, mak­ing the sup­ply and de­mand dy­nam­ics far more favourable for mid-mar­ket ho­tels.”

He added that the cost of con­struc­tion per key for mid-mar­ket ho­tels too is 20-30% lower than five-star ho­tels while such ho­tels “re­quire less in­vest­ment and take less time to build”.

Ac­cord­ing to Voivenel, the most im­por­tant thing to note is that de­spite the strong de­mand, only lim­ited bud­get ho­tels in­ven­tory is cur­rently en­ter­ing the mar­ket.

“More­over, lower cost of con­struc­tion, op­er­a­tions and staffing for mid-mar­ket ho­tels con­tribute to greater prof­itabil­ity of projects and faster ROI,” he said.

Wyn­d­ham Ho­tels & Re­sorts has grown its room port­fo­lio in the mid-scale sec­tor by over

25% across the MEA re­gion over the past two years, re­vealed Ig­nace Bauwens re­gional vice pres­i­dent, Mid­dle East, Eura­sia & Africa, Wyn­d­ham Ho­tels & Re­sorts.

Adding to that Bauwens said, “If you look at the travel pat­tern to­day, mil­len­ni­als are trav­el­ling more for a shorter time and are look­ing for more con­nec­tiv­ity. It’s not only about Wifi, it’s about book­ing pat­terns as well. Look at how mo­bile book­ings have risen. Dubai as a des­ti­na­tion needs to have more di­ver­sity as 2020 ap­proaches."

Ig­nace Bauwens, re­gional VP - Mid­dle East, Eura­sia & Africa, Wyn­d­ham Ho­tels & Re­sorts.

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