The Middle East's hospitality sector is buzzing with new builds and demand from first-time visitors. That requires hotel investors and builders to think of stay options other than luxury. Image Credit: Shutterstock

The Middle East is home to some of the world’s most exciting tourist attractions, from glittering skyscrapers and sun-kissed beaches of the UAE to the areas of natural beauty and cultural heritage that populate Saudi Arabia.

It’s little wonder, therefore, that the region has established an international reputation for luxury – especially within its hospitality segment.

Gulf nations boast a wealth of exclusive hotels whose rooms come with equally exclusive price tags. While such premises have served local economies well historically, the high ratio of luxury hotels also represents a barrier to travellers with smaller budgets or the growing number of visitors with different travel preferences.

As the region continues to evolve, there is an opportunity for more travellers to experience this wonderful region. Expanding mid-market hospitality will prove crucial in enabling us to achieve this vision and open the Middle East up to yet more travellers.

Supply and demand

The volume of travellers heading to the Middle East is growing rapidly. According to figures released by IATA, the region witnessed a 97.7 per cent year-on-year uptick in airline traffic during January 2023. Regional visitor numbers look set to grow even further over the medium term.

Research conducted by Mordor Intelligence indicates that the Middle East’s aviation market will expand by a compound annual growth rate (CAGR) of 6 per cent during 2022-27.

Why has the Middle East’s post-pandemic recovery been so rapid? Well, Gulf states’ impressive and prompt public health response to Covid enabled holidaymakers to return to their favourite destinations sooner than in most other regions. Events such as Expo 2020 Dubai and FIFA World Cup Qatar 2022 served to attract visitors who may otherwise have chosen to wait a little longer before travelling internationally.

Whatever the reasons, the fact is that visitors are returning in droves and – although important – luxury accommodation alone is not sufficient to cater to traffic on this scale. The region must diversify its accommodation offering to deliver genuine value to travellers, and mid-market operators are ideally placed to meet this need.

Shifting demographics

Mid-market hotels also have an important role to play in catering to the requirements of younger generations. Figures published by Condor Ferries, based on information provided by Group Accommodation, Expedia, and Skift, show that 70 per cent of millennials stay in hotels, yet only 35 per cent opt for luxury accommodations.

Meanwhile, 81 per cent of Gen Z travellers say their booking decisions are influenced by budget, compared with only 57 per cent of baby boomers.

Nevertheless, we should keep in mind that the budget-conscious outlook of millennials and Gen Z travellers when it comes to accommodation doesn’t mean lower revenues. Historically, these groups have been underserved by the Middle East’s focus on luxury hospitality, which comes down to the prioritisation of value rather than cost-cutting. We need to stop thinking of mid-market hotels as a compromise; in many cases, they represent a genuine preference.

An expanding portfolio

The Middle East’s hotel construction pipeline stood at 143,637 rooms across 549 projects as of Q4 2022, a record number, according to Lodging Econometrics. Our development across the region continuously supports this growth and is designed to bolster the Middle East’s mid-market hospitality segment and make travel to this fantastic region even more accessible.

By adapting property offerings, guest experiences and loyalty rewards to reflect the evolving demands of the growing numbers of visitors travelling to this region, the industry is pivoting towards a more inclusive approach.

This is critical to supporting the region in its ambitious goals. Ultimately, the delivery of a more diverse hospitality offering will facilitate further growth in Middle East visitor numbers, making the region more accessible to a greater proportion of global travellers.

While the luxury segment will no doubt continue to play a key role in this success story, it must be supplemented by a larger selection of high-standard, high-value mid-market options.

Delivering locations that offer quality, convenience, and affordability, mid-market hospitality offerings can fill this niche, catering to a previously underserved market segment while ensuring that more people than ever before can experience the wonders of the Middle East.

This way, we believe we can make travel possible for all.