Laurent A. Voivenel, Senior Vice President, Operations and Development for the Middle East, Africa and India, Swiss-Belhotel International, participated in a panel discussion today on ‘Balancing Supply & Bridging the Gap’ at the annual Great GM Debate held in Dubai. Attended by more than 200 leading hoteliers it is one of the industry’s most popular forums to discuss the unique challenges and opportunities faced by the hospitality sector on a day-to-day basis and to learn from the best practices of the peers.
Dispelling the common misconceptions that exist with regards to the return on investment and profitability of mid-market hotels, Laurent stressed, “There are many factors that make mid-market hotels a lucrative investment option for owners. The most important is that despite the strong demand only limited budget hotels inventory is entering the market, making the supply and demand dynamics far more favourable for mid-market hotels and, therefore, giving investors a great opportunity to capitalise on. Moreover, lower cost of construction, operations and staffing for mid-market hotels contribute to greater profitability of projects and faster ROI. A typical plot of land can accommodate 30-35% more mid-scale rooms than luxury or upscale rooms. Cost of construction per key for mid-market hotels too is 20-30% lower than 5-star hotels. Also, since there are limited facilities, such hotels require less investment and take less time to build.”
Speaking on the key challenges holding back the development of mid-market hotels and how these can be overcome, Laurent stated, “There needs to be some sort of intervention from the authorities regarding land allocation because in areas where mid-market hotels should be to attract investors, the cost of land is prohibitively high or not available for budget hotels. Alternative construction methods such as modular construction should be considered, and approval process eased for these to make the project financially viable. To promote investment in mid-market hotel sector there is need for more flexible financial support infrastructure with increased lending from banks.”
It is widely accepted by the industry that in order to establish the UAE as a sustainable destination, it is imperative to balance out the supply gap. So how are hoteliers addressing the requirements of modern travellers? Laurent said, “The millennial travellers are the key target for mid-market hotels and their preference is quality-driven, trendy and technology friendly hotels. The range and intensity of the experience is important to the millennial travellers and hence they seek accommodation options that are different to stereotypical ‘hotels’ and offer unique experiences along with value for money. Soon we expect to introduce in the Middle East Zest Hotels which is a fun and fresh budget hotel brand voted this year as Asia’s leading budget hotel brand at World Travel Awards. We believe that savvy travellers shouldn’t have to sacrifice comfort, convenience and style even when sticking to a budget and, therefore, created the Zest Hotels concept to fit that important gap in the market.”
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