“Ideally, such a development should also be supported by budget brands such as the Ramada Encore tier and Days Inn but we will have to see the land prices and evaluate the financial viability of such products.”
Similarly, Carlson Rezidor director business development MEA Elie Milky is assessing his company’s options across a broad range of brands.
“There is a phenomenal opportunity for our midscale, real estate efficient Park Inn by Radisson; the recently launched lifestyle select Radisson Red; and our core, contemporary Radisson Blu brands,” he said. “We would also consider a Quorvus Collection hotel and serviced apartments to provide a unique, luxury product in the upper tiers of the market.”
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One operator, which will almost certainly have a big presence at the development is likely to be Jumeirah Group. CEO Gerald Lawless told Hotelier: “Jumeirah, as the major hotel brand of Dubai and a member of Dubai Holding, will work closely with its parent company to understand future opportunities within Mall of the World.”
And even Dubai Holding CEO Ahmad Bin Byat was happy to admit the same: “We are confident that this project will appeal to different hotel operators and we welcome all to contact us.
“Obviously, we are planning to use our own capabilities as well. Jumeirah is a leading luxury hotel operator and both TECOM and Dubai Properties have successful experience in managing mid-market hotels.”
However, as Filippo Sona, head of hotels for MENA at Colliers points out, Dubai Holding will want to make sure it doesn’t undermine its own operations, which lie in close proximity to the development.
“If you are a retailer and you are going to put your brand in Madinat Souk, and suddenly across the road you’ve got the biggest venue in the world, which is going to get the attention of the world media, what will that do? That may dilute business.”
And there are the inevitable concerns about healthy occupancy and room rates being dented by a sudden mass of hotels in one location.
As ratings agency Moody’s points out in its latest report on Emaar Properties, the balance between supply and demand could tip in the wrong direction.
“There is a risk that the company embarks on a significant multi-year capital spending plan in the current market up-cycle at a time when competitors are increasingly becoming active, which could create overcapacity,” said Rehan Akbar, Moody’s analyst and author of the report.
With that potential oversupply in mind, Haddad said he will be taking a conservative approach.
“We look at this as an initial plan, which may be adjusted as it develops. We do not see property investors or ourselves venturing into an area where the demand and the yields are not up to the market expectations.”
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