Event Review: Hotelier Express Summit 2016 Review

UAE hotel demand will outpace supply by 2020

09.05 Sector overview: Accommodating Growth in the Middle East by STR client relationships director - Sarah Duignan

Hotel demand will outpace supply by 2020, according to STR client relationships director Sarah Duignan. The data was shared at the “accommodating growth in the Middle East” sector overview presentation at the Hotelier Express Summit 2016, held in Dubai. RevPAR levels had peaked in October 2009 at AED1,300 (US $353.9) and now current average rates are at AED 560 ($152.4) over the last 12 months. What are the current market conditions? The supply currently outpaces demand in the region. There are 10,202 additional rooms due to open in Dubai before the end of 2016. “According to STR data, supply continues to increase in the Middle East/Africa region (+2.9% in Q2 2016 compared with Q2 2015). This, in combination with a -4.0% drop in demand, resulted in declines across all KPIs for the region,” Duignan said. The data shows that this downward hotel performance trend will continue over the next few years, until demand growth resumes in the run-up to Expo 2020. However despite the downward trend, the data also shows that the Middle East is the biggest growth market for new hotels as a percentage of existing supply.

STR’s October 2016 Pipeline Report shows 158,714 rooms in 554 projects under contract in the Middle East and 57,740 rooms in 310 projects under contract in Africa. Among key markets in the Middle East and Africa, Makkah, Saudi Arabia (24,090 rooms in 15 projects), reported the most rooms in construction. Dubai, United Arab Emirates (19,687 rooms in 67 hotels), was the only other market to report more than 10,000 rooms in construction. “Low oil prices, currency volatility, supply increases and safety concerns (in some countries) still continue to affect the Middle East and Africa’s hotel performance,” Duignan added. So what does the future hold? By 2020, the demand for hotel rooms will outstrip supply, said Duignan. According to data predictions, by 2017 occupancy levels and supply to be very strong. While there will be some growth in 2018 with the focus on Expo 2020 but the biggest growth will be in 2021, according to STR’s November forecast.

Airbnb to further disrupt ME mid-market progress

09.25 Panel discussion: Alternative Accommodation – Competing with Disruptors

A panel of hospitality experts gathered at the Hotelier Express Summit 2016 for a controversial discussion of the impacts Airbnb will have on the future growth of the budget, mid-market and serviced apartment sectors in the Middle East

The Hotelier Express Summit hosted a panel discussion on the topic of alternative accommodation, in which Airbnb became a focus of attention, with hoteliers presenting opposing opinions regarding the seriousness of the impacts the new hospitality platform presents.

Time Hotels CEO Mohamed Awadalla said: “Airbnb is very nice, but it’s a totally different offering, I have realised they are no threat, their guests are not looking for our rooms, they look for a different product – we have facilities, security and F&B, it’s a different market. It doesn’t scare me.”

Citymax Hotels COO Russell Sharpe disagreed: “If you are not worried [about Airbnb], you are wrong. Airbnb as a company is valued at US $25 billion, their revenues are in excess of $1 billion, boasting 60 million guests. They will tell you that they own those 60 million [guests], it is their list, and they believe they will all come back and book again.” He added that the online booking platform has also shown 350% growth year-on-year, adding these figures are ‘scary’,

Smartotels founder and managing partner Tarek Daouk said: “With Airbnb, what is important to understand is the purpose of the trip and the length of stay, it’s all about why the guests are travelling. For example, in London if you want a specific neighbourhood, Airbnb could be more favourable [than a budget or mid-market hotel], this is important to keep in mind.” Roda Hotels & Resorts corporate vice president of strategy & development Louay Sarrage commented: “I’d say some segments are competing with Airbnb, like serviced apartments. But, if a guest is travelling with a maid and children, they need three or four rooms, so a serviced apartment makes more sense. However, millennials don’t care as much about service, and they don’t want to pay extra. Whereas a businessperson doesn’t think of Airbnb at all, he can’t take a risk [on accommodation], and besides, the company may be paying for the business trip.” He concludes: “Yes Airbnb is competition, but is not black and white.”

Hospitality brands should embrace YouTube

10:10 Presentation: Evolving Consumer Trends & Travel Behaviour

For many people, going on vacation has become about far more than finding a hotel with the best facilities, rooms and amenities. Increasingly, travellers are prioritising authentic experiences and local encounters in the destination they visit and where they stay, as Cloud 7 CEO Marloes Knippenberg explained during a presentation at the inaugural Hotelier Express Summit. “Videos of sterile hotel lobbies and rooms are a thing of the past,” Knippenberg said. “It’s interesting seeing the newest trends in technology and then adapting that in spreading your brand message. YouTube videos that share a feeling score higher in views than boring standard shots of a hotel.” A good example of how this is being done? Hotelier Middle East earlier reported that the debut film released by Marriott’s Content Studio in March 2015, has received over 5.1 million views to date. Since its premiere, the studio has also unveiled French Kiss, which has been viewed more than 6.1 million times, and is currently in production on its third film in partnership with Renaissance Hotels, entitled Business Unusual.

Hotelier Middle East previously reported that after the success of the short films, Marriott were considering a full length feature film as well. However according to Knippenberg, in the hospitality industry “budget is usually a big constraint”. Previously, Marriott International vice president, global creative and content marketing David Beebe said to Hotelier Middle East that it is important for brands to engage in mediums that consumers are interacting with such as YouTube and social media platforms.

‘UAE has a stigma of uber luxury hotels’ says expert

11:15 Presentation: Designing Hotels for the Customer Experience

UAE needs to shed its stigma for uber luxury when it comes to hotel designs and architecture – VE Experts director of design and development Nigel Eckersall said the onus is on the designers to do so

Speaking at the Hotelier Express Summit, Eckersall said: “We [designers] are always up against the stigma that resides in the UAE of being uber luxury. And we always start swaying towards the upscale when we start designing mid-market brands. That is where we need to be brave if we are going to see growth in this sector.” He continued: “It is important to remember that we are not designing for the upscale luxury, we are here for the mid-market consumer.” He said that location continues to remain king. “One of the interesting things is the location of the property. You need to see where your plot is and what it will allow your hotel to be, this is a piece of information that helps in the design process.”

There are three location types in Dubai: waterfront, metropolitan and city, he says. “The biggest issue here is – and we face that as designers – is all brands think they need to have waterfront property. But, we are coming to the metropolitan era of hotels where we will be filling up the plots in areas such as JLT and Business Bay. We are also going to be refurbishing the old plots of the town in Karama, at the same time look at new districts all together such as Dubai South.” It is going to be an interesting few years as we all find our way together to create success for the customer,” said adds.

Rebranding the UAE as an economy destination

11.35 Panel discussion: Rebranding the Region as an Economy Destination

“Dubai is not just a luxury destination, it can cater to every budget as well,” said Mondo Hotel Management COO Samir Homsi at the inaugural Hotelier Express Summit. This conversation took place during the panel discussion titled ‘Rebranding the region as an economy destination.’ “I don’t think there is a need to rebrand Dubai. The emirate will always be an upscale destination there’s no two ways about it. But of course it has to be seen as more affordable, but at the same time not look like a cheaper destination. Its aim should be to be seen as an aspirational destination and that there are affordable hotel options here,” said Radar DWC managing director Aditya Rajaram.

On why there is a need to rebrand the region as an economy destination AccorHotels vice president operations, economy and midscale, Gulf & Levant Puneet Dhawan said: “It’s a natural shift that Dubai should be available to all kinds of travellers and not just those who can afford luxury options. The mid-scale hotel scene has just exploded and it will continue to grow. As the appeal of Dubai grows, it’s important we cover all aspects of society so that every single traveller feels welcomed.”

F&B to become critical in mid-market hospitality

12.20 Presentation: Operating a Successful F&B Outlet

In a region where a high-level of quality and service is expected, yet affordability is still a major factor for consumers when choosing where to eat, the budget and mid-market hotel sector has a challenging time drawing diners to its outlets and operating a profitable business

Speaking at the Hotelier Express Summit 2016, HJA Hospitality executive director Henk Bruggeman delivered a presentation entitled: Operating a successful F&B outlet, in which he identified F&B outlets as being ‘of great importance’ to the budget and mid-market hospitality sector. “F&B is one of the most important parts of hospitality, but the meaning is often lost. Whether receiving one or 1,000 guests to your hotel, each is important and the F&B experience is vital, but is often missing.

“Be it in a five- four- or three-star, even in a one-star property, F&B needs to offer a memorable experience. F&B is about creating places where people cannot wait to return to.” He added: “With 8,500 restaurants in Dubai and 6,000 more to open in the next five years – this represents direct competition for hoteliers, if you have even one F&B outlet, this is great competition for you, and there are more coming. It is a critical part of your development in the mid-market sector. It’s time to rethink demographics, cuisine and concept. It is time to look at a complete transformation – focusing not on standard operating procedures anymore, but rather aiming to delight the customer. At the end of the day it is about experience, and F&B has been often left behind in my opinion. Taking care of the guest is true hospitality, F&B is all about just that.”

Mid-market hospitality sector needs to bridge gaps in technology

12.40 Panel discussion: Capitalising on the Digital Revolution

Experts discussed the importance of unity to combat their hurdles in technology in a panel discussion at the first Hotelier Express Summit

Auris Hotels founder and MD Hatem Gasmi stressed on the importance of the industry coming together on all technological fronts. “In our industry we are working in isolated tubes to capture guests, as we suffer from new players in the market who are basing their approach in a different way such as AirBnb, Uber or Booking.com.

Gasmi said it’s high time operators innovate in this space. “We have got caught out when it comes to technology because we are more of a consumer than a player in that segment. We need to become a player and need to understand the only way to succeed is to not work in isolation from our peers. We need to create a collaborative approach between independent hotels, the brands and chains.”

There is more to technology in hospitality than social media as hoteliers discussed the alternate channels that the industry can focus on.

XVA Hotel general manager Moses Barnabas said: “There is something called dark data that we sit on, and is indeed indicative information of where we want to go. We can learn a lot out of guest feedback and data. Stating an example, Barnabas said: “We are based in a pedestrian area [of Dubai] and we looked into the different ways guests could locate us quickly. Interestingly, Whatsapp came to the rescue as it’s very easy to share the location via the smartphone application, and since everyone is available on the service, it makes things easy for guests.”

Meanwhile, Smartotels LLC founder and managing partner Tarek M. Daouk said that the operator focuses on technology as its core element. “We have worked on a bit of a hybrid model where part of the content which is created and developed is on-site but is being managed by experts. For this, we have engaged a media company who has all the technical support to give us reports and analysis.”