GCC Projects: Hospitality for all

Forecasting how any sector will fare over the coming years is always fraught with danger. Predictions for the GCC region’s hospitality industry is no exception, as a number of factors such as oil prices and geopolitics will invariably have some part to play.

Most regional commentators agree, however, that occupancy rates — especially in the UAE — are likely to remain stable throughout the coming year. Following this, the region as a whole is expected to experience growth as new developments come online ahead of Expo 2020 in Dubai and the 2022 FIFA World Cup in Qatar.

There are already a number of high-profile developments planned or underway in Dubai. Some 30,000 hotel rooms are expected to be introduced to the Emirate during the course of the next two years.

Commenting on the UAE’s pipeline of hospitality projects, Ross Trivett, general manager of hotels and hospitality at ISG Middle East, says: “It is yet to be seen whether Dubai can sustain the high levels of occupancy for which it is known. Similarly for Abu Dhabi, oversupply in the short term poses some risks; but there has also been a healthy and steady growth in leisure tourism, which is likely to be maintained for the next few years.”

As each Gulf country has its own set of unique options to offer when it comes to hospitality, drawing comparisons can be difficult. Nevertheless, there is one trend that seems to draw all of GCC member states together at present: the need to diversify their hotel offerings.

This trend is likely to see hospitality projects incorporate more affordable and family-oriented accommodation in a bid to attract a wider and more varied customer base. Robert Hawkins, Roda Hotels’ corporate vice president for technical services, says that this diversity forms a key part of his company’s UAE development strategy.

“We have a number of hotel developments underway, and most will include five-, four-, and even three-star offerings,” he reveals.

“Hotels offering a wide range of accommodation, including a lower room-rate option, are the way forward,” he adds.

Roda’s ‘Lifestyle’ hotel concept represents one example of this type of accommodation. The rooms included within this segment will cater to the midscale and affordable sector.

The idea was born out of the belief that affordability should not mean the sacrifice of style or a loss of comfort. The company’s first Lifestyle project is scheduled to open in 2017 as part of Dubai’s Jewel in the Creek master development.

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“Lifestyle Hotels will offer good-quality facilities with a lower room rate, particularly targeting people in their 20s,” explains Hawkins. “These are tomorrow’s high earners, who will hopefully come back to the region in later life.”

Although many sector commentators agree that there is demand for this type of affordable hospitality project, the ‘luxury’ segment is expected to remain stable in the GCC region. Developers will endeavour to differentiate their products from other luxury hotels — from both brand-offering perspectives and by incorporating unique, high-quality family facilities within their premises.

“The trend for the luxury sector is now developed, and so the biggest innovation will be in the implementation of the latest technologies that enhance the guest experience,” notes ISG Middle East’s Trivett.

“These could include card-free room entry, free WiFi, the latest reservation systems, smart lighting and mirrors, reward scheme applications, and so on,” he continues.

But the profile of tourists journeying to the GCC — especially Dubai — is also evolving. Visitors are no longer exclusively interested in the luxury niche; the region is welcoming higher numbers of midrange customers, and even backpackers, all of whom are looking for cheaper accommodation that still offers that “wow” factor.

“This is something that Dubai should never compromise on,” emphasises Daousser Chennoufi, chairman and key architect at Draw Link Group. “It should continue to build on its reputation as one of the most progressive and extraordinary [hospitality markets] in the world. The UAE has worked hard to make Dubai International Airport a hub for global passengers. [The resultant] influx of people will create a demand for short-term, low-budget stays,” he notes.

The GCC hospitality developers that succeed in creating concepts that satisfy the requirements of this changing tourist flow are those most likely to prosper and help the region maintain its status as a popular travel destination.
As CEO of ALEC, the contractor responsible for some of the Gulf’s most renowned hotel builds, Kez Taylor is acutely aware of the need to generate high-quality but affordable hospitality developments.

“There is a greater need for high-quality, affordable, and practical hotel rooms,” he says. “Location will be key for business and leisure travellers alike, to ensure convenience around the cities. Affordability and location will be the two deciding factors.”

But it is important to remember that one cannot apply a one-size-fits-all model to GCC hospitality. In the Kingdom of Saudi Arabia, for example, religious tourism will likely account for the lion’s share of visitors for the foreseeable future. Even so, a large domestic hospitality sector has blossomed of late, with new developments aimed at the Kingdom’s ‘staycationers’.

Oman, on the other hand, is able to attract tourists owing to its natural beauty and rich cultural heritage. Qatar’s strength, meanwhile, appears to be in the development of medical and educational destinations, with supplementary conference and hotel facilities.

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Qatar’s hospitality sector is also gearing up for the 2022 FIFA World Cup, but some football fans may opt to stay in the UAE and commute back and forth on match days. Indeed, many are predicting that the Emirates’ established reputation for hospitality will be further enhanced by a selection of more affordable options created in time for Expo 2020.

Another consideration for the region is the price of oil and gas. Should the lacklustre cost of crude persist, many global economies will be unable to bear the high prices traditionally associated with Gulf hospitality.

With this in mind, GCC various construction outfits will do well to focus on alternatives to existing resorts; developments that will offer more competitive rates, compared to luxury resorts.

That said, it does not follow that the quality of hospitality projects in the GCC will decrease during the coming years. On the contrary, the region’s construction sector is looking to create intelligent designs that make hotels more affordable through the use of innovative technologies and materials.

“In this regard, countries such as Thailand and China have achieved impressive results, and they are currently offering remarkable accommodation options at inexpensive prices,” comments Chennoufi.

And though it may seem somewhat odd at first, high occupancy rates can present somewhat of a barrier to GCC hospitality development. The region’s existing hotels will be reluctant to embark upon refurbishment initiatives if it means missing out on revenues. Even so, design and fit-out firms such as ISG Middle East and Draw Link Group are confident that with the right approach, hotel retrofit projects will increase in popularity in the short- to mid-term future.

“We anticipate an increase in activity over the next two years as older properties upgrade to compete with new stock entering the market,” comments ISG’s Trivett.

And of course, as the region’s landmark events draw ever closer, the hospitality sector will have no choice but to gear up for increased demand.

Mark Shea, head of hospitality at Faithful+Gould concludes: “It’s an exciting region to be in at present. There is a lot of hotel construction taking place, and if occupancy rates grow as expected, the sector is heading in the right direction.”