Helping or Hindering?
The introduction of a financial incentive was well received, however, it raised other issues that could hamper the development of three- and four-star hotels in Dubai.

“From an owner’s perspective, the challenges are mainly expensive land plots that may not be supported by a mid-market operation in financial terms,” said Milky, echoing comments made to Hotelier earlier this year by Landmark Hospitality CEO Praveen Bhatnagar, who said the “cost of land is the biggest hurdle I would say in getting our feasibility and ROIs in place”.

For Darroch Crawford, managing director, Premier Inn ME&A, however, the main worry was a potential increase in minimum room size for three-star hotels.

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“The DTCM does a great job in driving up standards and promoting Dubai and there is no doubt that there is a need for more high quality three-star hotel rooms so I welcome this initiative to encourage more to be built, however, the proposal to introduce minimum room sizes in the draft new hotel classification regulations could have quite the opposite effect,” he stated.

Crawford explained: “Under the proposed rules three-star hotel rooms must be a minimum of 28m² and such a size is simply unsustainable, as it increases construction costs by anything from 15 to 30% depending upon the brand.

This effectively prevents brands like Premier Inn, Centro and Citymax developing viable businesses in their current form and the 10% waiver of municipality fees will not be enough to combat this huge issue.

“At the time of writing the three Premier Inn hotels in Dubai hold first, second and fifth place among the three-star hotels on Tripadvisor in Dubai. This demonstrates that the consumer is more than delighted with the product at 24m² and will certainly not wish to pay more for a larger room.

“About four years ago Abu Dhabi Tourism started down a similar path, with an announcement that three-star hotel rooms needed to be 32m². They soon realized that this was unsustainable and after viewing a 24m² Premier Inn room and seeing that not only was it spacious enough for two adults it could even comfortably accommodate a family of up to four, they reduced their requirement to match.”

Citymax Hotels COO Russel Sharpe acknowledged that enforcing minimum room-size regulations would be costly.

“We have 20m² rooms – to do a 26-28m² room it would cost a lot more money.”

When Hotelier raised the issue with DTCM, it would not discuss the draft regulations but confirmed that room size would be more important in future.

Dr Ahmad Belhoul, CEO Strategy and Tourism Sector, DTCM, said: “Within the current imposed regulations, there are no minimum size requirements applied by star ratings – i.e. the size of room does not have an impact on the star rating. However, in the process of developing the new hotel classification framework it has been decided that the size of rooms should have an effect on the star rating.

“The development of the classification system has taken place over a couple of years, allowing for deep consultation with the industry both within Dubai and internationally, and at various times throughout this process different sizes of rooms per star rating have been suggested. We are currently finalising what those will be but the figures quoted are not accurate.”

Belhoul was keen to reassure developers and hoteliers alike: “One of our top priorities is the development of the midmarket segment and we will continue to work with the industry to ensure that the classification system helps, rather than hinders this.

“In our moves to increase the range of options within this segment, it is imperative that we work closely with developers and operators to create mutually beneficial results and we remain in constant dialogue to ensure that this happens,” said Dr. Belhoul.

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