Comment: Delivering what Dubai needs

With both AHIC and ATM this month showcasing a host of the Middle East’s most exciting hospitality projects, there’s no doubt that the key talking points will revolve around Dubai; Expo 2020, Tourism Vision 2020 and the need to double both Dubai’s number of visitors and number of hotels by, you guessed it, 2020.

According to Dubai’s DTCM, the current pipeline shows that there will be 33 more hotel establishments with 8,500 rooms added by 2016. There are currently 82,000 rooms, so that leaves a massive opportunity for operators to expand, with estimated capacity for another 73,500 rooms by 2020.

A significant portion of these will likely be signed by local operators, such as Jumeirah Group, The Address, Rotana, and HMH. Jumeirah, for example, is working with parent company Dubai Holding, which “has a lot of ambitions to develop hotels in Dubai”, to deliver on this expectation, said president and group CEO Gerald Lawless.

New brands from America to Asia are also set to enter the market, with LA’s Viceroy and Hong Kong’s Langham both having signed projects on Palm Jumeirah, and Rosewood underway in DIFC.

But there are still leading luxury names that have yet to make their mark, namely Peninsula Hotels, Six Senses, Banyan Tree, GHM and Mandarin Oriental, although there are rumours the latter is coming to Jumeirah Beach.

This, according to president and chief operating officer of FRHI, Michael Glennie, who will be speaking at AHIC, reflects that Dubai is starting to mature: “Having your brand represented in Dubai is essential to accelerate expansion in the region. Some very well-known brands are still looking for the right opportunity, which means the market has reached some level of maturity and that investors have become more savvy”.

Indeed, the experts Hotelier spoke with ahead of AHIC were confident that investors were more sophisticated. As Meliá Hotels director of development Martin Ostermann observed: “While the market is in the midst of its learning curve, certain (more institutional and regional) investors have moved from purely prestige driven motivation to consideration of yield as a key tool to influence investment decisions”.

Jumeirah’s CEO — group operations Nicholas Clayton added that developers were “exercising more discipline around projects ... with a longer term plan to sustain cash flows and quality”.

The pressure now is on operators to really prove their mettle amid a more competitive landscape. Lawless predicted “a very exciting and positive period” ahead, but warned that hoteliers needed to “deliver the value for the investors here in Dubai”.

“It’s a beautiful challenge to have and it’s the kind of challenge we need but certainly we have to, as they say, hit the ground running to make sure we deliver on that,” he said.

While the new hotel deals we expect to hear of during AHIC and ATM will reinforce the potential for Dubai, this is the message the industry really needs to take away.