A missed opportunity for family resorts?
Dubai hotelier Michael Scully, managing director of First and Foremost Hotels and Resorts, has identified a lucrative opportunity in the Middle East’s burgeoning hotel market...
"The UAE certainly likes its large trophy assets, which have traditionally performed extremely well. At one stage owners were getting up to 30% ROI on their large investment portfolios. However, such high returns are — in most cases — highly unlikely to be repeated in today’s market and the foreseeable future.
"Today, borrowing costs are relatively high and there is a lot more stock in the market compared to a number of years ago.
"We know that Dubai continues to go from strength to strength in the tourism sector and I believe this will certainly continue in the foreseeable future. However, we do know that the low periods — such as during summer — continue to become more difficult due to the additional room supply in the market.
"Over the years I have identified the areas where I believe the tourism industry in this region has growth potential largely ignored due to the success of its traditional leisure and business markets."
Keep it in the family
"In order to facilitate growth in the UAE and the wider Middle East, it is time we stopped ignoring many lucrative opportunities in associated leisure markets, including the elderly, singles, cultural, adventure, sports, and water sports in particular, and — my favourite — the family leisure market.
"In the family leisure market we should be catering to those families with young children under the age of five — this market is huge; it has the advantage of not being governed by school holidays and is currently underdeveloped.
"Furthermore, not only can this market incorporate many of the other segments mentioned above, but it is geared more towards the three- to four-star markets as far as facilities and product are concerned, which requires substantially less capital than traditional high-end developments.
"We know from the success of the many family hotels in the Mediterranean, Far East and Americas that there is a huge demand for this form of leisure which concentrates far more on the activities as opposed to structural facilities."
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The local factor
"These properties can be built using local supplies, run by the local workforce and many of the activities can incorporate local facilities and environments, such as water parks, beaches, mountains, desert and parks. They also require an extensive onsite animation team to look after the younger family members, allowing the parents and older children to relax, or enjoy the adventure activities.
"We have already seen from the success of nature reserves in Africa that cabin- or tent-based resorts — through their ample, relevant services and activities — can be perceived by their target market as just as luxurious as many high-end, high-cost buildings.
"In answer to your question, I believe that there is a market in the region for camp-style resort projects with no more than 60 to 100 units, delivering activities.
"These resorts should have an emphasis on the younger guest, but also offer sufficient comfort for the accompanying adults to enjoy a relaxing, entertaining get-away.
"In addition, these highly interactive resorts can also accept day visitors to boost revenues. Ensure the location is far enough to enjoy subsidised or low-land costs without being too remote and consider associations with city organisations or hotels to offer the adventure experience and split two destination options. Furthermore, it’s your choice (or the investor’s) whether these family-orientated resorts serve alcohol.
"We have some great innovations in this region — think of the cartoon characters ‘Freej’ — why not utilise them to create character attractions in the Middle East just as Disney, Club Med or Asterix Villages have done in France."