Dubai races to complete 160,000 hotel rooms by October

With only a few months left for Expo 2020 Dubai, what does it mean for Dubai’s hospitality sector? According to the 2019 Index Hotel Markets Report, the Expo is expected to generate $44 billion (Dh161.59 billion) in revenue from tourism across the GCC.

The report says Dubai is aiming to complete 160,000 hotel rooms by October.

This incoming new supply will put pressure on average daily rates (ADRs), as well as occupancy. Matthew Sexton, managing director and partner at SAY Studio, a Dubai-based design firm, says it will be a hugely competitive time for the hospitality industry.

As the market prepares to host Expo 2020 from October 20 through April 10 next year, hotel rooms are being competitively priced in an effort to stimulate demand and keep up with accelerating room supply.

According to STR’s August 2019 data, Dubai’s hospitality sector experienced a 7.6 per cent year-on-year growth in supply and a 7.4 per cent year-on-year growth in demand.

But occupancy over the same period only fell 0.2 per cent and the average daily rates dropped 12.5 per cent to reach Dh389.11. Revenue per available room (RevPAR) also recorded a drop of 12.6 per cent to Dh266.57.

Tim Cordon, area senior vice-president at Radisson Hotel Group, Middle East & Africa, agrees that the hospitality market is “not at its peak performance as it was before.”

But “there are opportunities for select hotels with the right brands and the right operating model to do really well in Dubai — as the city becomes more internationally competitive.”

Experts feel with the influx of tourists visiting and new demographics operating in Dubai, the hospitality sector is learning and adapting its strategies and offerings to tailor to the needs of that audience. “To stay ahead hotels have to constantly evaluate their offering,” agrees Sexton. He highlights three fundamental focus areas for hoteliers to remain in the running for 2020 — customisation, sustainability and refurbishments.

Customised rooms

According to a research, Drivers of Change in Hospitality by InterContinental Hotels Group (IHG) and Amadeus, a hyper-personalised room could be one of the big changes out on the hospitality horizon.

“It’s the beginning of the end for the traditional fixed-interior hotel room,” says Sexton.

“Guests can already customise things like what they watch by streaming their own content through the in-room TV or connecting to the speakers via Bluetooth. But what hasn’t happened yet is rooms being designed in such a way that they become flexible, not your static single, double, twin, suite or family room.

"We envisage a space where gym bunnies are able to swap desks for yoga mats, parents can replace the TV for a play space and business travellers can add in router boosters and VOIP hardware.”

Hotel accommodation, which has traditionally been bought in a standard and uniform way, will need to adapt, as 61 per cent of global travellers state a preference for hotels to be priced in a way that allows them to add bespoke options.

More sustainable

As consumers become careful about the future health of the planet, the concept of “conscious travel” is becoming important. This revolves around the idea of social consciousness being part of the travel experience.

So hotels, says Sexton, will need to highlight their sustainable credentials front and centre to match and attract these fast-evolving consumer sentiments.

“We have definitely seen more and more clients wanting to incorporate sustainable elements in their interiors. Hotels need to incorporate these elements, from 100 per cent recycled glass tiles and counter tops to organic carpet tiles, recycled ground-paper-pulp wallpaper, designer seating made from scrap metal to match the needs of the planet,” he says.

Also, regular refurbishments are needed to maintain customer loyalty, market share and room rates. “The majority of hotels in the UAE have crossed the seven-year operational threshold and many are in need of refurbishment,” says Sexton.

Stephen Meredith, general manager of Taj Jumeirah Lakes Towers, agrees that sustainability will be at the core of the hotels offering, underpinning all operations and processes.

Taj Jumeirah Lakes Towers opened doors in December and in keeping with the brand’s focus on creating sustainable practices, the hotel has introduced paper-less check-in and uses plant-based compostable food packaging wherever possible.

“The visitor influx for 2020 will be primarily felt towards the second half of the year,” says Meredith.

“With excellent infrastructure, greater variety of leisure activities and accommodation, Dubai is positioning itself as a ‘must visit’ tourist destination.

"The significant increase in the number of hotels and rooms releasing into the market will be hugely advantageous for travellers as they benefit from competitively priced room rates. But long term, the effects are less certain.

"I hope significant investment in innovation and infrastructure will ensure a consistent flow of visitors to the city; and continue to keep the hospitality industry buoyant post Expo 2020.”