DUBAI, United Arab Emirates—The Middle Eastern hotel environment has until now been dominated by luxury product, but sources said that is changing as markets add more midscale hotels in response to reducing oil supplies, new visitor attractions and heightened competition.
Hoteliers must now work to understand the value of that sector in each geography and to then create the correct strategies to add value, target the right customers and grow market share, panelists said during the “Midmarket strategies” session at the recent Arabian Travel Market.
Government incentives for developers in places like Dubai are helping the transition. That market is aiming for a certain number of midscale rooms by 2020 when it hosts the World Expo.
The Dubai government also has drawn up new guidelines on higher-end hotels.
“Two or three years ago, Dubai realized it was not all about luxury, but now of course everyone is piling into the space at the same time,” said Richard Dean, moderator and a broadcaster at local media outlet Dubai Eye.
Amine Moukarzel, president of the Middle East and North Africa at Louvre Hotels Group, said his company is motivated to grow globally across all hotel segments after being purchased by Chinese conglomerate Jin Jiang.
“The motivation, passion, though, in the Middle East is in our midscale brands, the Tulip brands,” Moukarzel said. “Now is the time to capture the opportunities in the midscale sector. We need to prove our offerings in the market, to invade the mindsets of our investors.”
Moukarzel also said he sees opportunity for his budget brands, such as Campanile.
“Hotels need the strength of scale and distribution now whereas before they never used to,” he said. “Success comes with critical mass. I will be more successful with five Campaniles in the (United Arab Emirates) than I will with one.”
This push to midscale will be achieved, panelists said, without having to shift from Dubai’s more high-end tourism offerings. Panelists also said the same will be largely true of other mature markets in the region, such as Abu Dhabi.
“I have seen so many changes. First, it was shopping, then real estate, then luxury and now attractions,” said Ali Abu Monassar, chairman of The Vision Destination Management “The experience will remain the same. It is just that we will now attract a whole new sector of visitor.”
Karim El Guanaini, SVP of destination management for Miral Asset Management—which operates Abu Dhabi’s Yas Island hotel and attractions development—said new theme parks coming to Yas Island included a Warner Bros. theme park.
“Dubai and Abu Dhabi have realized it is critical to diversify,” El Guanaini said. “Customers are looking for services, and they are becoming more critical. You need to focus on and deliver those needs.”
Mark Nogal, regional head of focused service brand management for Europe, Middle East and Africa at Hilton Worldwide Holdings, said Hilton was “building on our knowledge and then adapting that to individual markets.”
“It remains about location,” Nogal said. “All three (of our) Holiday Garden Inns in Dubai are in micro-markets, which for us need to have a mix of business and leisure travel.”
The race is on
Even with the rush into the segment, hoteliers can’t just expect to automatically succeed by building any midscale property.
“Design is essential in the midmarket space. These guests demand choice,” Nogal said.
Miral’s El Guanaini agreed, but he said there is a huge opportunity in the region to create unique destinations.
“We look at the micro side of design, the different types of room size and F&B choices, but functionality and walkability are the most important criteria as they emphasize the experience and organic traffic flow,” El Guanaini said. “And in terms of location, well, you have created a destination in this way.”
Moukarzel said not to forget the basics and to give guests what they want.
“Service requires innovation as the guest most likely is to change tomorrow, and they are increasingly knowledgeable,” Moukarzel said.
Sources said modular construction practices have added to area hotels’ return on investment and on the company’s first-mover advantages.
“This innovation in the modular world includes temporary accommodations, tented camps for instance. There is a revolution here,” El Guanaini said.
Other essential design and service criteria for the region include free Wi-Fi, substantial bandwidth, lots of electrical points in the lobby and guestrooms and staff possessing essential neighborhood knowledge, panelists said.
Even with a shift from luxury to midscale, guests will still expect some services to remain in place across Middle Eastern hotels.
“Typically in the (United States), focused-serviced hotels do not have bellmen, but we know they are needed in this region,” Nogal said.
Panelists disputed the idea that millennials have different needs from other generations.
“I at my age am equal to two millennials,” Moukarzel said. “I, too, now want to avoid queuing for check in, but I also remember when putting a fax machine in the guestroom was a wow moment.”