Hotel refurbishment a growing market for Dubai

08 May 2014

Older properties need upgrading to remain competitive

The refurbishment of hotels is expected to be a growing source of work for Dubai’s construction sector, as more hotels in the emirate need overhauling to remain competitive as new properties open.

“There is a lot of refurbishment at the moment,” says Filippo Sona, director and head of hotels, Middle East and North Africa (Mena) region at the US’ Colliers International. “Operators and owners want to improve their product because there is a lot of new competition coming in.”

According to data from Colliers, 34 per cent of the hotels in Dubai and Abu Dhabi have gone beyond their peak performance stage and need upgrading and refurbishing.

Although not as big as new-build projects, many contractors working in Dubai are now targeting the sector to capitalise on the wave of hotels that will be upgraded ahead of the 2020 World Expo. “It is a competitive sector, but it is one we are looking at very seriously,” says an international contractor.

There have been several high-profile refurbishments planned or completed in recent weeks. In late April, local developer Majid al-Futtaim Properties (MAF) awarded UK-based ISG a $35m refurbishment of the Kempinski Mall of the Emirates Hotel.

The work includes a complete upgrade of all 393 guest rooms, suites and ski chalets, in addition to food and beverage outlets, meeting rooms, gym and spa, along with the enhancement of the existing facade. ISG is expected to start on site during May and complete the works within twenty months.

Earlier in April, the US’ Starwood Hotels & Resorts Worldwide reopened the Sheraton Dubai Creek Hotel & Towers, following an extensive $50m renovation to the property, which first opened in 1978. That refurbishment included all guestrooms, facilities, public spaces and the hotel’s Italian and Indian restaurants.

Hotels that are more than seven years old need to consider refurbishing their facilities. “After seven to 10 years, a property needs a soft refurbishment, 10 years plus and a major refurbishment is needed, especially in prime areas where occupancy is running at more than 75 per cent,” says Sona.

Once upgraded, hotels can perform as well as newly built properties as they can leverage a longstanding reputation as well as memories that patrons have developed over the years. “There are many beautiful hotels in Dubai and if people have memories from these properties then when refurbished, they can punch above the weight of newer flashier properties,” said Frits van Paasschen, CEO of Starwood Hotels & Resorts Worldwide, speaking at the Arabian Hotel Investment Conference (AHIC) in Dubai on 5 May.

The trend is not limited to just Dubai. Hotels in other markets will also need refurbishing. According to Colliers, 43 per cent of hotels in Riyadh, Jeddah and Mecca are past the peak performance stage, whereas in Doha, just 17 per cent have reached that milestone. “Retrofit and refurb is going to be very important in the region going forward,” says Peter Head, executive chairman of the UK-based Ecological Sequestration Trust.

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