The rise of the (3-4) star hotel in Dubai

Words by BSBG Media Team, Wednesday 08 October 2014

Dubai's hospitality industry is now witnessing a huge increase in the number of 3-4 star hotels. In preparation for Expo 2020 the number of hotels in general are on the rise, but the most significant increase is in the 3-4 star portion of the market, with the hope of attracting the more budget conscious and business travellers.

Traditional hoteliers with long standing relationships with local developers are not the only ones who are looking for a slice of the pie, new hotel brands and developers not traditionally linked with the tourism industry are taking the plunge into what seems to be a lucrative market sector for Dubai.

The existing climate

Dubai has an established reputation for world class hotels and boasts the world’s only 7 star luxury hotel, but what about all the other hotels in town?

The graph above shows the growth trends for hotels as published by Dubai Department of Tourism & Commerce Marketing (DTCM). Despite the economic down turn in Dubai during the financial crisis, the trend in number of hotels is up with the exception of 2-star hotels, which has declined since 2010.

Below, we can see the increase in the number of hotel rooms by class or star rating with significant growth seen in 3, 4 and 5 star hotel rooms available in the market.

2014 - A bumper year

2014 is shaping up to be a busy year for hotel developments. By May of this year, DTCM had reported 151 applications for 3-4 star hotel developments totalling 25,000 keys. In October of 2013, DTCM launched a programme encouraging growth across the 3-4 star hotel range with a target of 35,000 keys to be provided. The programme introduced incentives for hotel developers such as a waiver on the Dubai Municipality’s zoning fee and a two year break on Municipal fees, provided the hotels opened prior to 2017.

MAFP, BSBG and the Hilton Garden Inn

Majid Al Futtaim Properties (MAFP) currently holds 11 hotels in its portfolio, welcoming over 1.2 million guests annually. With an impressive list of brands under its banner, such as Kempinski, Pullman, Sheraton, Novotel and Ibis, MAFP has embarked on the development of one of the first Hilton Garden Inn’s in the UAE.

Located in Al Barsha, the new Hilton Garden Inn - a 370 key, 3 star development, will be located adjacent to the Mall of the Emirates Ibis Hotel. BSBG was engaged by MAFP to deliver the concept design and tender the project. With works about to start on site in July 2014, completion is expected to be achieved within 16 months after commencement.

Working together

As Dubai moves closer to Expo 2020, investment in tourism infrastructure is on the rise from both government and private sources. With tourism and related accommodation targets announced and the increase in government incentives, developers such as MAFP are investing capital into the market place to achieve the goals and targets outlined by the government.

References

Dubai Department of Tourism & Commerce Marketing

Arabianbuisness.com – “Dubai receives 151 applications for 3 & 4-star hotels”

Arabianbuisness.com – “Dubai hotel revenues, occupancy forecast to continue to rise”

Arabianbuisness.com – “Dubai will overtake Paris on list of world's most visited cities by 2019 – report”

Majid Al Futtaim Properties

BSBG Media Team

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