WIDER BENEFITS
While these numbers may suggest some drawbacks for getting behind mid-market properties, Sona pointed out that the economic benefits for developers stretch to beyond just the rooms and facilities in the hotel.
“We’ve done a lot of studies on the economic contribution of tourists staying in mid-market hotels to the retail market, and specifically to shopping malls,” he said. “Typically, a tourist that stays in mid-market hotels which are in close proximity to a retail complex will stay five days and will visit the complex twice during their stay”
“For every dirham they spend on room accommodation, they’ll spend AED 2.5-3 in the shopping mall. [They are] using the hotel just as a place to lodge. Their activities and entertainment are done outside the hotels. This will contribute to not only growth of tourism but also growth of retail revenue in Dubai,” he added.
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One of those mid-market brands with an upcoming mall development is UK-based Premier Inn, which was recently selected by Nakheel for a 373-key hotel, which will be part of an extension of the Ibn Battuta Mall complex in Dubai.
The company has more than 670 hotels in the UK and opened its first property in the UAE in 2008. Since then, progress has been slower than the company expected, with five hotels now open in the region.
“It’s fair to say that we would be much further on today if it had not been for the recession, during which we slowed down our pace of growth considerably,” said Premier Inn Middle East managing director Darroch Crawford. “The good news is that things are really ramping up again now and we are very excited by our future prospects.”
Speaking to Hotelier in 2010, Crawford said the company was aiming to have 50 properties in the region within 10 years; halfway through that period, he is both confident and pragmatic.
“Our pipeline today is the strongest it has ever been and we are delighted to have signed contracts in almost every country in the GCC to add to our existing portfolio,” he said.
“We may not quite hit our target of 50 hotels in the region by 2020 due to the cancellation of a multi-site deal in Saudi Arabia, but with a fair wind we won’t be far behind.”
Another international company looking to capitalise on that growth of the mid-market segment is
Tsogo Sun, which recently re-entered the UAE with a four-star Southern Sun in Abu Dhabi.
Operations director Andrew Hosking is excited about the opportunities for Southern Sun and the company’s other three- and four-star brands, especially in Dubai, with the government’s push for more properties in this segment.
“I think the reason [development has] been slow is that Dubai has always been perceived as a glitz and glamour destination so the hotels that have come on stream fulfil that expectation,” he said. “The reality of a functioning economy is that not everyone can afford to stay in a luxury five-star hotel when they are doing business.
“Therefore you are now seeing more interest in three-star and four-star properties. The demand is there.”
There may demand and momentum building, but Premier Inn’s Crawford remains hesitant to describe it as a tipping point just yet.
“Many of the recent announcements have been about developers’ or brands’ intentions, rather than real deals,” he commented.
Nevertheless, he believes that, especially in Dubai, there has been a marked shift in attitudes from developers since the authorities embarked on their push for more three- and four-star hotels.
“I think that the statement from HH Sheikh Mohammed Bin Rashid Al Maktoum, that Dubai will require many thousands of additional three- and four-star hotel [rooms], added to the incentives recently announced for the sector, has made more investors sit up and take notice of the returns available from internationally branded hotels like Premier Inn,” he said.
“We have been inundated with enquiries in recent months and we expect to announce a number of other new projects soon.”
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