Stephen Joyce at AHIC 2017

AHIC 2017 reveals strong potential in the mid-market hotel sector, with supply set to match that of luxury hotels in the GCC by 2021, reports STR

Dubai, UAE. 27 April 2017 – The economy and mid-market hotel segment was identified as presenting a significant opportunity for hotel owners and operators alike at the Arabian Hotel Investment Conference 2017 (AHIC), being held at Madinat Jumeirah in Dubai from 25-27 April, 2017 and organised by Bench Events and MEED.

Expert speakers also identified a gap in the market for more experiential accommodation and entertainment attractions, especially in Dubai, as the market continues to diversify its hospitality offering.

Now in its 13th year, the annual knowledge and networking platform for the global hospitality investment community, AHIC, attracted more than 700 delegates keen to better understand regional hospitality market fundamentals, opportunities and investment potential.

In an exclusive presentation, STR Managing Director Robin Rossmann provided insight into the midscale pipeline and performance in the GCC, revealing that mid-market supply is set to match luxury in the GCC by 2021.

According to STR, the ‘Midscale’ has out-performed the ‘Upscale & Upper Mid Classes’ and ‘Luxury & Upper Upscale’ classes since 2011 across the GCC.

Rossmann observed that mid-market hotels are under-penetrated and pointed to significant growth potential underpinned by growing intra-regional travel and demand for affordable travel.

Commenting on the trends, Jonathan Worsley, Chairman, Bench Events, Board Director, STR and Co-Founder of AHIC, said: “The mid-market has been discussed at AHIC for several years, but in 2017, we have witnessed a significant shift as the compelling investment model for lower development costs and higher, quicker returns has put the mid-market in favour. It was fascinating to explore the long-term view, looking at costs, rate strategy and returns with our many speakers and sponsors.

“Testament to the potential for the mid-market in the Middle East is the launch of US-based hotelier Choice Hotels International in the UAE and Saudi Arabia, with a pipeline of seven signed hotels already and many more to come. We were delighted to welcome Stephen P. Joyce, President & CEO, Choice Hotels International, Inc, as one of our keynote speakers to gain insights from one of the world’s leaders in the mid-market hotel industry.”

Commenting on the company’s expansion, Stephen P. Joyce said the growth of the middle class and demand from travellers for quality, midscale accommodation had fueled Choice Hotels International’s entry to the Middle East with three of its brands: Clarion, Comfort and Quality.

“We think the timing’s now finally right for a company like Choice to enter the market in a fairly significant way and establish a strong moderate tier lodging component which is purpose-built, value-oriented, but high quality,” said Joyce, during his live-on-stage interview with Jonathan Worsley.

Joyce added: “Historically when you look at this region and what people considered moderate, they kind of pull the chandelier and pull the marble and they don’t change the operating model. Our operating model is there should be 20-25 employees in the hotel; it should run very high margins; it should be relatively low capex to get in; relatively high margin production and low cost to operate, but at the same time, satisfy the guests’ needs in a way that isn’t being done currently.”

In a dedicated plenary panel session focused on investment in the mid-market, Elie Milky, Vice President Business Development MEA for The Rezidor Hotel Group, echoed this.

“We are very active in the midscale market in the Middle East, with 20 percent of our properties within that bracket. However, we have more in the pipeline along with serviced apartments. Operational efficiency starts at the development of the product; you may not need a comprehensive back of house and you can reduce the staff-to-guest ratio,” said Milky.

In the same panel, Christian Nader, Vice President Development, Middle East & Africa, Kempinski & Shaza Hotels, said the company’s new venture, Mysk by Shaza, is carefully positioned in the upper-midscale bracket.

“While Shaza is five-star, we studied the ROI to position Mysk above the four-plus star rating,” said Nader.

“Owners are taking a different approach than previously, moving away from the need to have a luxury five-star property. However, they tend to demand add-ons such as ballrooms. We are managing their expectations by explaining that the Mysk brand and offering is sufficient for the market,” Nader added.

In a separate session focused on Dubai and The Next Five Years 2017-2022, Gurdish Bassi, Economist at GRMC Advisory Consulting, revealed insights into tourist spend patterns in Dubai.

He predicted that total tourist spend in Dubai is expected to reach AED144 billion by 2021, compared to AED113 billion in 2016, and that the largest spending increase would be in the Entertainment sector.

Bassi said: “Shopping malls may not have it all; Entertainment and Experiential concepts will capture a significant proportion of total spend.”

Klaus Assmann, Vice President – Hospitality and Retail, Dubai Parks and Resorts, added his views on the further potential for Dubai.

“I think theme parks, I think more MICE space, I think much more out of the box thinking from hotel operators [will follow]. As we know, there’s growth already regarding shopping malls, there are many, many more projects coming up like this. I think it becomes much more residential, much more freehold, just in general I think it will grow more and more but on the same pattern as it is now,” said Assmann.

Dr Martin Berlin, Partner, Deals Strategy ME, Global Deals Real Estate Leader, PwC, concluded: “Dubai will develop into a city that is on a par with other cities, other global megacities, other global destinations and gateway cities”.

The conversation at AHIC centred around the theme Catalysts of Change, with technology and digitisation highlighted by many speakers as having a major impact on the future of the hospitality industry, and also featured discussions centred around topics including asset management, overseas investment, F&B, brands, third-party management and alternative investment models.

For more information visit: www.arabianconference.com

Contact: Frances Barton, Media Relations Director, In2 Consulting; frances@in2consulting.com; Office: +971 4 455 8499; Mobile: +971 50 650 3900

Notes to Editors

 

About Bench Events

Global event organiser Bench Events has a long track record of delivering multiple premium hotel investment conferences and forums across Europe, the Middle East, Africa, Asia and Latin America.

Market leading annual conferences include the Arabian Hotel Investment Conference (AHIC) in Dubai, now in its 13th year, the Africa Hotel Investment Forum (AHIF) the new Asia Hotel and Tourism Investment Conference (AHTIC), The Summit in London and the Latin American Hotel & Tourism Investment Conferences (SAHIC).

Bench Events’ extensive portfolio also includes the Global Restaurant Investment Forum (GRIF) in Dubai and AviaDev, designed to promote the future air connectivity in Africa.

Bench Events’ mission is enabling prosperity by facilitating growth, networking, and thought leadership in the hospitality industry worldwide. www.benchevents.com

 

About MEED

MEED is a remarkable senior management media brand, that encompasses subscription to the MEED Business Review publication and website, www.meed.com, as well as organising the MEED Quality Awards for Projects, AHIC and Innovation Live! MEED also works with clients on bespoke content, events, broadcast and digital offerings.  MEED also has two high-value content businesses, MEED Projects and MEED Insight. MEED Projects is the Middle East’s premium project tracking database and MEED Insight offers tailored research and in-depth analysis. Established in 1957, MEED, has been integral to delivering business information and news, intelligence and analysis on the Middle East economies and activities ever since.  www.meed.com

 

Sponsors

Sponsors of AHIC 2017 are: Al Marjan Island, The Rezidor Hotel Group, Jumeirah Group, and Katara Hospitality as Platinum Sponsors; AccorHotels, Emaar Hospitality Group, Hilton, IHG (InterContinental Hotels Group), Marriott International, Bahrain Economic Development Board, Club Med, Wyndham Hotel Group, Moroccan Agency For Tourism Development – SMIT, IFA Hotel Investments, Wanda Hotels & Resorts, Choice Hotels International and Dubai Parks and Resorts as Emerald Sponsors; Action Hotels, Alkamal International, Berwin Leighton Paisner LLP, HVS, Langham Hospitality Group, Sahl Hasheesh, Taj Hotels Palaces Resorts Safaris, Melia Hotels International, Louvre Hotels Group, Modul University Dubai, Shaza Hotels, STR, Colliers International, HKS, Roya International, SSH, Mövenpick Hotels & Resorts, PwC, Ghina Real Estate, Kerzner International, Insignia Worldwide Group, Isukoshi, LXA and Pallavi Dean Interiors as Gold Spons