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Dubai Courts New Markets with Value-Based Hospitality Options

July 12, 2016 Destination Middle East / Dubai No Comments Email Email

Dubai, a city known for its world-class hospitality industry and landmark hotels, is training its focus on mid-market hotels in a bid to attract a larger percentage of the millennial and family travel business. Dubai’s transformation from a luxury and business-centric city to a more mature destination attracting a diversified tourist profile, the move to increase the city’s mid-scale room stock aligns with the requirements of the millennial and family travel segments from emergent markets such as China, Africa, Brazil and India. In addition, with the emirate targeting 20 million visitors per year by 2020 and with the upcoming arrival of mega projects such as Dubai Expo 2020 and a number of world-class theme parks, it is imperative for Dubai to scale up its accommodation options.

“The newly affluent mid-class segment in developing countries such as China, Africa, Brazil and India have sparked the development of more mid-market options in Dubai. A recent study by PwC shows that young travellers from Asia and Africa, even those who can afford luxury, are opting to stay in affordable hotels as they tend to value experiences over five-star accommodations. This shift in focus among a powerful travel segment has presented a host of opportunities to investors in the GCC hospitality industry and helped to diversify our tourism offering to fit more developing source markets and groups,” stated Issam Kazim, CEO, Dubai Corporation for Tourism and Commerce Marketing.

Millennial travellers represent 20 per cent of international travellers at present and are expected to undertake 320 million international trips per year by 2020, offering long-term opportunities to cities that cater to the needs and requirements of this itinerant segment. This, coupled with the increasing number of young families from developing countries such as India and China holidaying in Dubai, has led to an influx of value-based options. These include the likes of Courtyard by Marriott, Centro by Rotana, Ibis, Hilton Garden Inn, Starwood’s Aloft and Element brands, Novotel, Mercure, Aparthotel Adagio, Citymax, Holiday Inn and Dubai-based Byblos Hospitality, as well as home-grown Jumeirah Group’s first mid-market brand, Venu, and Emaar Hospitality Group’s Rove Hotels.

Rove Downtown Dubai, the first property under Rove Hotels, opened in May 2016, defines Dubai’s new mid-market niche with its cosmopolitan, high-tech, cultural and social outlook – defining features that make it appealing to the tech-savvy, adventurous modern traveller. The property celebrates the very pulse of modern Dubai with its unique approach to delivering high quality hospitality experiences that transcend typical value hotel norms. Conceived as a social and cultural hub for modern-day explorers, it stands out for its treasure trove of art works that celebrate the local culture. Contemporary comfort is the watchword, with spacious rooms, designer mattresses, free Wi-Fi, a self-service laundromat, boutique convenience store and luggage lockers, adding to the independent lifestyle Rove offers its guests.

Chris Newman, Chief Operating Officer at Emaar Hospitality Group, explained: “Rove Hotels is an idea that has come of age just in time with the focus Dubai is placing on the millennials and family travel segment. Rove transcends the age and demographics of visitors by appealing to the mindset of the modern-day traveller who seeks value. With Rove Hotels, we are delivering a brand-new hospitality experience in Dubai. We are setting several firsts, including a never-before celebration of the local culture in a hotel environment. With this, our hotels serve as the first window to experiencing the undiscovered charms of the city. Rove celebrates the “cool factor” sought by visitors, with all our upcoming hotels in central locations, within easy access of cultural and business hubs, and offering a fuss-free service offering of great food, youthful ambience and contemporary comfort. And by 2020 there will be 10 Rove Hotels in Dubai with over 2,600 rooms in key locations across the city.”

The increasing number of young families taking to the road has led to pent-up demand for holiday homes and affordable luxury options in Dubai. Millennial families typically save on accommodation to invest in areas such as fine dining, bespoke excursions or shopping, reinforcing the focus on wallet-friendly options. They are also more likely to travel with friends, participate in multi-generational travel with extended family members, and undertake spontaneous trips thanks to flexible working conditions and increasing accessibility to destinations around the globe – but especially to cities that have strong aviation links, such as Dubai.

Historically, mid-market hotel developers in Dubai have faced a number of challenges, including high land and development cost making it economically unfeasible with lower returns; lack of transportation to locations primed for value hotels such as Al Barsha and Deira; developer focus on hero hotels; high vulnerability to rate fluctuations due to low barriers of entry and lack of infrastructure or support for developers, particularly in finances and construction.

To spur more developers into investing in the mid-market segment, in late 2013 Dubai began offering a waiver on the 10 per cent municipality fees for four years and has put in place a more streamlined construction approval process that will reduce approval time to two months. Dubai Tourism is also allocating government land towards the development of mid-market hotels, thus enabling global and regional hospitality brands to develop hospitality concepts that marry the city’s cosmopolitan personality with its Arabian roots, offering luxury with a budget-friendly proposition. In conjunction, the city has worked on robust new regulations for holiday homes that will ensure more variety in the accommodation mix, with a guarantee of high standards irrespective of where travellers choose to stay.

The move is gaining traction, with 44 per cent of the rooms to be delivered this year falling into the mid-market segment and an additional 20,363 rooms expected to enter the market between 2016 and 2020. One of the key investors in the sector is Hilton Worldwide through its Hilton Garden Inn and Hampton by Hilton brands, which is bringing its globally recognised expertise to Dubai across several locations.

“Mid-market has become the ‘hot topic’ of Dubai’s hospitality industry in recent years, with families and young people now holding an increasingly prominent role in the emirate’s visitor demographic. This, paired with source market growth from China and India, has resulted in significant increases in demand from travellers seeking accommodation options with extra value. Recognising this potential, Hilton has helped drive this new phase of Dubai’s visitor offering, with a significant focus on developing our hugely popular Hilton Garden Inn and Hampton by Hilton brands, which we expect will double our presence in Dubai in the next few years. Towards the end of 2015, we welcomed our first guests to mid-market Hilton Garden Inn hotels in Al Muraqabat, Al Mina and at Mall of the Emirates, and have also announced the signings for three Hampton by Hilton hotels, including the brand’s largest property under development globally in Dubai’s Al Qusais area,” stated Rudi Jagersbacher, President, Middle East & Africa at Hilton Worldwide.

“We have long-recognised the potential and benefits of diversifying our tourism proposition, and with the traveller landscape undergoing major transformations over the past few years, the midmarket segment has an immense role to play in increasing our visitor share from existing and new source markets. Dubai is connected to a third of the world’s population within a four-hour flight radius, and the presence of value-based airlines like flydubai have helped attract new traveller segments to the city. By offering affordable luxury, we are ensuring a seamless and consistent experience for these emergent sectors,” concluded Issam Kazim.

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