Dubai: Despite gradually eroding margins, investment in Dubai’s hospitality industry is expected to continue to grow beyond the next two years, according to a joint report by KPMG and International Hospitality Consulting Group (INHOCO) released on Wednesday.
The report, which looks at Dubai’s hospitality sector beyond 2020, highlights the growth of theme park tourism, and health tourism, as key contributors to the future of the emirate’s hospitality sector.
Dubai has been investing heavily in different themed adventure parks, which aim to be a major attraction, especially as there are currently no significant theme park destinations between Singapore and Paris, the study notes.
Furthermore, the local government has also supported the growth of medical tourism, through the launch of initiatives such as the Dubai Portal for Health Tourism (DXH) website. The site allows tourists to travel to the UAE for their medical needs and choose from a wide range of specialities and services. Increasingly, investors are looking into the sector, with a mixture of joint ventures and home-developed expertise attracting regional and global custom.
“All signs point towards a maturing hospitality sector, yet there is potential for further growth. To maximise growth, both owners and operators need to address challenges, such as the rise of third-party agencies, technological disruption, changes in the regulatory environment, pricing and costs. Investors will also need to focus their efforts on creating synergies and planning for the long term,” said Sidharth Mehta, partner and head of building construction and real estate at KPMG Lower Gulf in a statement.
Hurdles
While Dubai’s hospitality industry has witnessed “startling” growth over the last few decades, the report continues, operators have systematically faced two main hurdles: Manpower and operating costs.
With a total of 100,000 hotel rooms expected in Dubai by 2020, up by around 17,000 from the current count of 83,000, significant employment growth may be projected for the sector.
Currently, the hospitality industry operates at a ratio of roughly one member of staff to one room. Besides the employment growth figures, KPMG and INHOCO say that management capabilities would also require a boost — globally in the hospitality sector, roughly one third of staff are managers. This implies recruitment and training potential beyond 2020. Cost structures could evolve as a result, and owners and operators will need to keep a close eye on spend and profitability, the report recommends.
Meanwhile, the changing technological landscape may bring new challenges for the hospitality sector, yet leveraging new technologies and turning them into opportunities may result in greater cost efficiency and improved customer loyalty for hospitality operators. Consumers expect greater personalisation which in turn requires hotels to harvest increasing amounts of data — hotels must also take greater precautions to ensure that data is adequately protected so as to retain customer trust.
