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Mark Shea ... mid-range market growing.

Mid-range hospitality market offers huge opportunities

DUBAI, May 3, 2015

While the upmarket hotel segment has traditionally dominated the Middle East hotel landscape, the rise of the mid-range is reshaping the hospitality industry in the region, say leading experts.

“There has been a growing diversification of the hotel industry, largely due to growing demand from price conscious international tourists and business travelers who want something other than the full five-star luxury experience at premium prices,” said Mark Shea, Faithful+Gould’s head of hospitality in the Middle East.

He was speakign ahead of the Arabian Hotel Investment Conference (AHIC) set to take place at the Madinat Jumeirah, Dubai from May 5 to 7.

Faithful+Gould, the world-leading integrated project and programme management consultancy which specialises in the hospitality sector in the GCC, will lead a roundtable discussion on the hospitality sector at AHIC, gathering industry experts who will share their insights on the opportunities and challenges confronting the hospitality sector throughout the region.

Refurbishments and conversions will also be a key focus of AHIC, with Faithful+Gould Project Director Simon Enders leading a presentation on Getting Under the Skin of Refurbishments and Conversions, which will assess the feasibility of doing renovations on existing properties, including achieving maximum results with the least possible spend.

According to Shea, medical and religious tourism are also fueling the growth of the mid-market range, which “could provide profitable long-term investment.”

In recent years, hotel infrastructure build up has seen intense activity in the Gulf, with two mega international events set to take place in the region.

In Dubai, the Department of Tourism and Commerce Marketing (DTCM) estimates that a total supply of 140,000 to 160,000 hotel rooms will be required by 2020, an increase from the current supply of approximately 90,000 rooms, with a further 10,000-plus rooms being reported as needing refurbishment prior to World Expo 2020.

In Qatar, experts estimate about 45,000 hotel rooms are required to meet Fifa 2022 World Cup capacity requirements, with 21 hotels planned for construction by 2017.

“Each city has its own supply and demand characteristics. Dubai is a mature tourism destination, whereas Doha is emerging and has the challenge of maintaining momentum until the World Cup Qatar 2022. However both markets have room for mid-range provision,” added Shea.

For cities hosting mega-events, post event scenario will also need to be considered, as these offer lucrative opportunities for the hospitality sector and could mitigate risks of overcapacity.

He explains: “The challenge here is to investigate alternative uses for accommodation post-event, for example turning athletes’ villages into affordable residential communities. This may be a challenge for Doha in particular, as it currently attracts less tourism than Dubai. All major Middle East regions have targeted hospitality as key sectors for growth and diversification of their respective economies.”

Further afield Saudi Arabia currently offers huge opportunity for mid-range investment. The kingdom’s 2030 strategy includes a significant focus on tourism, as well as reinforcing provision for existing high numbers of religious tourists.

Elsewhere in the region, Muscat, Manama and Kuwait City all have a growing need for mid-market provision.

“Locations that maximise the asset’s potential mid-range hotels may be a more lucrative investment if provided as part of a mixed use development, rather than as stand-alone assets. Considering versatile use of mid-market hotel accommodation can make better use of the building’s footprint. Mid-market hotels generally do not require lavish reception areas, and as a result, the hotel facility can be situated on the upper floors, releasing the ground floor to optimise retail footfall potential. In addition to new build opportunities, some areas have potential for converting old office buildings into mid-range hotels,” Shea said.

The roundtable discussion to be led by Faithful+Gould will include experts such as Rawaf Bourisli, director of development, Action Hotels & general manager, board member, Action Real Estate Company (KSCC);  Paul Diab, vice president-operations, Golden Tulip Mena; and Hubert Viriot, CIO–IFA Hotels & Resorts and CEO–Yotel Ltd, UK. They will discuss build up models as well as funding approaches that could prove critical for contractors looking to enter the market for mid-range products. - TradeArabia News Service




Tags: AHIC | hosptality | mid-range |

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