Building regional hotel brands is the way forward

02 May 2008
Shaking off an over-reliance on established hotel operators will help the region hit its tourism targets.

More than 46 million tourists visited the Middle East in 2007 and the figure is growing by 5 per cent a year. But the Gulf, and the UAE in particular, is seeking faster growth.

To achieve this, tourism megaprojects need to deliver on their promises. This will not be easy, but growing competition among hotels should encourage visitors seeking better deals.

Investment in hotels in the GCC is expected to peak in 2010, after which occupancy rates will fall from the current high of 83 per cent in Dubai to a more normal 65-70 per cent.

This will bring the Gulf into line with established destinations such as London, where the average occupancy rate is 74 per cent, and Cape Town, with 70 per cent. It will also lead to a fall in average daily room rates as competition for guests increases.

In the background, the cost of constructing new facilities is rising rapidly. So it is perhaps surprising that developers want to take on even more risk by managing hotels themselves, rather than leaving it to experienced international operators. However, the greater control it gives them means the risk is worth taking.

Developers will be able to create their own hotel brands targeting local, regional and international visitors. In the current market, developers compete with each other to sign up the world’s best hotel brands and the operators hold many of the best cards. Shaking off this over-reliance on hotel operators will help the region hit its tourism targets.

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