Dubai hospitality to grow beyond 2020
dubai — Dubai’s hospitality industry will continue to expand beyond 2020, driven by a host of factors, including increased flow of travellers to theme parks, cultural attractions, Expo 2020’s transformation into a tourist attraction and emergence of more affordable hotels.
Analysts believe that measures like increasing service standards, new attractions, renovating existing venues, introduction of new brands and renewed focus on promoting Dubai as a destination will not only attract new tourists to the emirate but also increase average length of stay and, therefore, average spend by visitors in the emirate.
“As the Expo 2020 installations are repurposed, it is anticipated that the number and scale of these attractions will continue to grow. Significant tourism development such as IMG Worlds of Adventure, Dubai Parks and Resorts and cultural attractions like The Louvre in Abu Dhabi, are expected to steadily attract leisure travellers for the decade beyond 2020,” said Sidharth Mehta, partner and head of building construction and real estate at KPMG Lower Gulf.
Laurent A. Voivenel, SVP, operations and development for the Middle East, Africa and India for Swiss-Belhotel International, says huge investments in airports and hotels, broadening portfolio of attractions, diversification of source markets and collaboration between various business sectors are all accelerating the pace of Dubai’s growth into the future.
“We are in an era of shared economy. Rate
pressures owing to supply and demand chain dynamics, expanding middle class in key source markets, growth of low-cost carriers, changing requirements of travellers based on changing demographics, emergence of new forms of competition such as Airbnb, rapid digitalisation and advancing technology are all pushing our industry towards a new ecosystem defined by collaboration, quality and consumer value,” he said.
Christopher Lund, associate director for Mena at Colliers International, believes that Dubai’s hospitality industry is constantly evolving, and he expects major changes to drive the industry up to and beyond 2020.
He noted that one of the most important factors is the growth in demand from the mega-source markets India and China. These two countries are seeing their middle-class grow at a very fast pace, meaning an increasing population with a passport and the ability to travel abroad. This has had implications for a number of key tourism destinations globally, Dubai included. With the introduction of new visa procedures in Dubai for Indian and Chinese nationals (i.e. visa on arrival in some cases), tourism from these countries has seen double-digit growth.
In 2017, the number of Indian tourists to Dubai increased by 15 per cent (and is already the largest source market for Dubai), while the number of Chinese increased by 41 per cent from the year before, according to DTCM statistics. In 2017 and Q1 2018, China was the fifth largest source market for Dubai, up from ninth place in 2015. This growth is expected to continue up to and beyond 2020. Up to 2021, Colliers forecasts that the annual growth in Indian travellers to the UAE will average eight per cent per annum, versus 20 per cent annually for Chinese tourists.
Last year, Dubai attracted 15.8 million tourists and the number is expected to grow to 20 million by 2020.
According to KPMG’s ‘Accommodating the Future: The Dubai Hospitality Sector Beyond 2020’, Dubai’s tourist demographics are diversifying, with the number of visitors from China, Russia, Southeast Asia, Latin America and subSaharan Africa increasing year on
year. KPMG’s Mehta noted that there are currently no significant theme park destinations between Singapore and Paris, other than attractions in the UAE. “Dubai’s initial ventures into theme parks, in addition to upcoming supply from Abu Dhabi, could consolidate the emirate as a major theme park destination.”
DTCM data suggests that the five-star market remains strong and stable, with over 100 hotels of this class seeing average occupancy rates of 85 per cent in over 36,000 rooms recorded in January 201816. The luxury sector still represents one third of Dubai’s total inventor.
The total number of one to three star rooms, added to the number of standard hotel apartments, is now larger than the number of five star rooms. With the occupancy of 1-3 star hotels and hotel apartments at 89 percent in January 2018.
“Finally, although it may seem counter-intuitive, the fact that tourism as a sector is seen as a growth industry across the whole of the GCC [whether it be Saudi Arabia concentrating on religious tourism, Bahrain investing in a plethora of cultural events, Oman promoting the beauty of its nature, or new nearby attractions such as Louvre Abu Dhabi] is likely to mean an increase in visitors to — and within — the Gulf. This suggests that Dubai’s hospitality industry may be heading for further success beyond 2020,” the report said.
More affordable offerings
Colliers’ Lund expects affordable hotels in Dubai to remain at the centre of hotel investment discussions up to and beyond 2020 as the city is maturing as a destination for both mass tourism as well as niche tourism. As an example, in 2017, 20 per cent of hotel rooms in Dubai were rated from 1 to 3 stars, while this number was 43 per cent in Paris.
— waheedabbas@khaleejtimes.com