Investment in Dubai’s hospitality industry is expected to grow beyond the next two years, although margins are gradually converging with global norms, according to a joint report by KPMG and International Hospitality Consulting Group (INHOCO) titled ‘Accommodating the Future: the Dubai hospitality sector beyond 2020’.
The emirate has also been investing heavily in different themed adventure parks, which aim to be a major attraction, the report notes.
Furthermore, the local government has also supported the growth of health tourism by launching initiatives such as the Dubai Portal for Health Tourism (DXH) website. The latter now allows tourists to travel to the UAE for their medical needs and choose from a wide range of specialties and services.
“All signs point towards a maturing hospitality sector, yet there is potential for further growth. To maximize growth, both owners and operators need to address challenges, such as the rise of third-party agencies, technological disruption, changes in the regulatory environment, pricing and costs. Investors will also need to focus their efforts on creating synergies and planning for the long term,” says Sidharth Mehta, partner and head of building construction and real estate at KPMG Lower Gulf.
While Dubai’s hospitality industry has witnessed startling growth over the last few decades, operators have systematically faced two main hurdles: manpower and operating costs, the report points out.
With a total of 100,000 hotel rooms expected in Dubai by 2020, significant employment growth may be projected for the sector, considering Dubai’s current hospitality industry where the ratio of staff to rooms is estimated at roughly one member of staff to one room.
Meanwhile, the changing technological landscape, the report says, may bring new challenges for the hospitality sector, yet leveraging new technologies and turning them into opportunities may result in greater cost efficiency and improved customer loyalty for hospitality operators.
“Consumers expect greater personalisation which in turn requires hotels to harvest increasing amounts of data – hotels must also take greater precautions to ensure that data is adequately protected so as to retain customer trust”, the report states.
From the owners’ perspective, the report outlines some of the main concerns which include industry consolidation, price increases, volatile customer loyalty, a changing regulatory environment, and an increase in investment choices.
For investors, the report adds that a major opportunity seems to present itself. Traditionally, hotel operators would house their staff in residences within walking distance of their property, but with land becoming increasingly expensive, this may now be less economically viable. “There could thus be a sound business case for building dedicated, secure residences for hotel staff”, the report claims.
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