ROOMS NEEDED
By the end of 2015, the current pipeline shows that there will be approximately 33 more hotel establishments with 8500 more rooms added to Dubai, revealed DTCM.
While hotels are continually being added to the pipeline, the numbers suggest capacity for another 73,500 rooms, which presents significant opportunities for hotel operators to sign new flags over the next few years, in order to reach the 164,000 target for the emirate.
Already, financial incentives are in place to encourage mid-range hotels, with eligible three- and four-star hotels to be granted a concession on the 10% municipality fee, which is levied on the room rate for each night of occupancy.
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According to Al Marri, the initiative is designed to incentivise hotel owners to bring forward their construction timelines, creating more mid-range hotel rooms in Dubai more quickly. But are hoteliers taking the bait?
At Wyndham Hotel Group, regional vice president for the Middle East and Africa Bani Haddad said he saw more potential to develop the company’s budget and economy brands following the announcement of the win.
“With the estimated number of visitors for the Expo, we are preparing ourselves for another very strong development cycle. We have actually already started receiving enquiries from developers on the back of the announcement! You also have to think that with Expo 2020, Dubai’s current boundaries as a city will expand significantly to cater for both the Expo and also for the new DWC airport,” said Haddad.
“We see opportunity across the board. We anticipate a strong demand for our upscale Wyndham Hotels & Resorts brand, but to be able to attract and accommodate the anticipated 25 million visitors, we also see significant growth for our budget and economy brands such as Ramada Encore, the select service tier of our established Ramada brand, and the iconic Days Inn and Howard Johnson brands.”
Rezidor is also “actively pursuing opportunities” to expand its Radisson Blu and Park Inn by Radisson brands, said Mark Willis, area vice president.
“The expansion of Dubai towards Jebel Ali is creating more sub-markets for our various brands, with or without Expo 2020. Having said that, this historic event will present itself as a greater trigger for positive sentiment across the economy, the emirate and the country, with more hotel and serviced apartments opportunities arising in the Jebel Ali area as a whole and closer to the launch and expansion of Dubai World Central Airport,” Willis observed.
“We see an opportunity in each master development as sub-markets are created. The port of Jebel Ali, the area’s industrial zones and the Limitless development along Sheikh Zayed Road also present themselves with fantastic opportunities.
We will be able to offer the right product and the appropriate positioning in the most suitable location. The decision is based on the type of demand expected, the market opportunity and a sound investment potential for our owners.”
Willis added: “The need for budget and mid-market hotels is stronger than ever as Dubai works towards attracting growing numbers. Park Inn by Radisson is a brand and product that offers a real estate efficient, midscale product to cater to not only mid-market demand, but also the new and evolving generation of travellers.
Such a product also offers investment opportunities to investors aiming to capitalise on the large gap in the market in various locations around Dubai and the UAE”.
He also said that hoteliers needed to think beyond Dubai in terms of the potential afforded by Expo, with business in the neighbouring emirates to increase too.
“We have also to consider the infrastructure that is critical to the hosting of the Expo and developments such as the new Al Maktoum airport which will provide extra capacity to Expo visitors in 2020. It is expected the pace of development in and around Dubai World Central will increase in order to meet infrastructure requirements needed for hosting the event.
The knock-on effect of this would be the increased demand for accommodation, restaurants and facilities in this area and, as our hotels on Yas Island Radisson Blu and Park Inn by Radisson are close to this area, we expect increased business to these properties,” said Willis.
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