With the number of new rooms in Dubai slated to exceed 120,000 by 2019, hotel owners and operators in the city must become increasingly innovative to stand out in one of the world’s most crowded hospitality markets.
This is no secret. In the first half of this year alone, about 2,500 new hotel rooms were added to the market in Dubai, bringing the total up to a whopping 80,400. In addition, about 40,600 more rooms are slated to be added within the next two and a half years. Dubai, in other words, has risen to be the most glamorous tourism oasis on the planet (with apologies to Las Vegas), and, with Expo 2020 approaching, the complexity of the city’s hospitality market has grown along with it. As such, broke JLL says that developers and owners must look at new ways to monetize the assets that they currently have under construction.
One of these methods is proving to be a reconsideration of strategy through rebranding or de-branding of properties that are currently operating, according to JLL’s most recent Dubai Estate Market Overview report, which revealed that hospitality-focused REITS (real estate investment trusts) are increasingly likely to come to fruition now in the wake of a recent launch of Five Holdings Reit.
It is important to note that vast majority of recent growth in Dubai has taken place in the luxury segment of the market, creating what experts say is a heavy dependence on the upper tiers of the hospitality industry. There are exceptions to the rule—such as the new 270-room Rove Trade Center—but mid-market hotel properties only account for 18 percent of Dubai’s hospitality market. These sort of properties are also clustered together geographically, with the majority of them located in the Barsha Heights and Bur Dubai districts.
This is unlikely to change as growth continues, with mid-market properties only expected to contribute roughly 8 percent of the new rooms that are currently being added, compared with the 40 percent projected to be added by rooms that fit into the upper end of hotels.
This building spree in Dubai is also putting pressure on visitors via room rates, as the city is also seeing results in its efforts to grow tourism, which has kept occupancy rates robust and improving. For example, the May 2017 occupancy rate for hotels in Dubai was 84 percent, showing an uptick from last May’s number of 82 percent. Average daily rates dropped by about 3 percent over that same period, landing at $206 a night according to JLL.
Some property companies are working to stand out by introducing new hotel management operating models for owners willing to take on their brands. One example of this is a company creating prevalent fee structures that involve operating companies getting a base fee, which means a percent of the hotel’s total sales, in addition to an incentive fee based on gross profits.
The following projects are currently underway in Dubai:
DAMAC Towers by Paramount Hotels & Resorts is a hotel and residential complex located in the heart of the stylish Burj area, Dubai. This four-tower development comprising circa 1,200 luxury serviced suites in three towers, will offer sumptuous living with a Hollywood flavour.
The magnificent Taj Arabia Palace Hotel, a breathtaking look-a-like of the original and yet four times larger! It is embedded in an exquisitely landscaped estate replete with lush greenery, soothing water fountains and cascading streams.
More information on hotel projects can be found on TOPHOTELPROJECTS, the specialized service provider in the exchange of cutting-edge information of hotel construction in the international hospitality industry.