Will the emergence of holiday homes, airbnb, etc., continue to disrupt the industry?
The realisation that the forecasted supply will probably not be sufficient to cater to the demand as we get closer to Expo 2020 has meant that options such as holiday homes and central rental options are inevitable. Will the growth of these alternative options be a direct competition and thus a threat for us? Yes of course.
What trends will we see in the serviced apartment sector?
The appetite for serviced apartments will continue to grow. This product is extremely well positioned for corporate clientele because of the space they offer.
Usually 40 - 50% of our guests will be long-stay residents who will be here for one month; some of them will stay for a year, and the majority will be with us for three to six months. Many of these people will be working on projects. Similarly serviced apartments also appeal to families who prefer to stay five to seven nights during school holidays simply because of the convenience this type of accommodation offers. One of the trends we expect to see is the incorporation of serviced apartments into hotel operations to some extent. We have a few developments where are going to have part of the inventory as the hotel with the serviced apartments next door, and then we start combining the two.
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The trend for standalone-style restaurants in hotels was a big trend for 2013/2014. Will this continue to evolve, or are third-party managed outlets the future for hotels?
There is no doubt that standalone-style restaurants continue to be a big trend, particularly in such a highly competitive lively buoyant market as Dubai. It is probably less of a trend in other markets for the time being though.
Let’s not forget that one of the reasons why this is such a prevalent trend here is that if restaurants want to have a liquor license they need to be located within a hotel, with one or two exceptions. There are, of course, many other options but most of the big names are located within hotels for that reason.
What is going to be interesting to watch is the new Canal Project as that will be made up of many restaurants which may or may not be licensed. There will also be hotels so I think we can expect to see standalone restaurants within or linked to the hotels.
What further support do you require from the tourism board in your region/country? How do you see classification systems evolving in 2015?
Hotel classification is generally designed to provide clarity and distinction between the various hotel offerings to help people categorise hotels into different star ratings.
However, through this we often miss the impact the classification system may have on both the investment and development cost of a hotel.
Dubai has always had a superior classification system, which partially justified the growth of the luxury category because the budget and mid-scale properties were often not sustainable. Because of this, DTCM (Dubai Department of tourism and Commerce Marketing) recently reduced the room size and other requirements in all categories in order to promote further diversification and investment into the midscale and budget segments.
While this could be seen as a positive move for investors, one should not forget the importance of the operator’s standards. While each government might have its regulation, hotel chains also have theirs which dictate similar standard requirements. If the two are conflicting or misaligned, this creates further need to clarify what is truly needed and then provides further confusion and complexity rather than simplification.
The real issue behind hotel classification remains the same, which is complexity and ambiguity, and an international organisation such as WTO (World Trade Organisation) should take steps to homogenise this globally. The various and numerous classifications in every country and sometimes city, create more confusion and often drive additional costs which could be avoided. Furthermore, while the system is used to help reassure guests, the end user chooses where to stay less on the start rating and more on the location, price and reviews.
Interview continues on next page...
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