Speaking with the BBC’s Stephen Sackur during the opening session of the Arabian Hotel Investment Conference 2018 (AHIC 2018) in Ras al-Khaimah, Emaar Properties chairman Mohamed Alabbar said that the twin challenges of hotel room oversupply in the region’s traditional segments, along with the digital threat from Airbnb, meant that hoteliers must change.
“Are we designing the right hotels for tomorrow?” he asked. “Habits are changing. We are building hotels for us, for the 45 year olds and above. Are we smart enough to build the right hotels for future generations?”
“The hotel industry has to change.” he said. “They only know how to make beds, answer the phone. It is dying. Airbnb is responding to what people want. The hotel business has not embraced technology. Industry must use technology to understand what the customer wants. We must simplify and be more efficient. Customer service must match expectations.”
“Attracting young people is important, it is where the best intelligence will come from. We must hire the best talent,” he said.
Alabbar said some parts of region are facing hotel room oversupply, but added that there was still a need for new capacity in many markets in the region.
“We are looking at opportunities in Saudi. But also looking at Egypt, which is underserved, and India as well.”
Alabbar said that Emaar is also considering investing in hotels below the luxury five-star level.
“We have some young brands called Vida. Somewhere between three- and five-star hotels,” he said.
“That is where the volume of customers are,” he said. “I want to do business with 80 per cent of the market rather than just the premium, but when I talk about economy brand, it is respectable, not low class.”
“There will still be a need for five star. I don’t think I will be building so many five-star hotels in future. The traditional business will always be there. But a big portion of our industry must change. At the same time, the traditional five-star business must be more efficient.”
“I prefer two brands, economy and business, but we have three: Address, Vida and Rove.”
Middle East outlook
Alabbar said that he was very optimistic about the outlook for the regional market, despite the negative geopolitical and economic events of recent years.
“We have a good story coming out of Saudi. An amazing story,” he said. “We have great stability in Egypt. These are the big economies in the region and, as a result, I am positive. I hope the war in Yemen and Syria will soon end. We should be ready for good news in the coming years.”
AHIC 2018 is being held for the first time in the UAE’s northern emirate of Ras al-Khaimah, which is seeking to drive increasing investment in its hotel and tourism sector.
Alabbar said that Emaar was investing significantly in Ras al-Khaimah.
“We are building a 250-room Address Hotel on Al-Marjan Island, which will open in 24 months,” he said. “We are also developing 230 residential units in Ras al-Khaimah. And we are in discussions about some other possible investments.”