29/01/2016 09:52 AST
CMS, in association with Colliers International, organised Dubai Hotels and Leisure Summit. The summit focused mainly on the growth of the industry in the regional market and ways to further boost the hospitality sector.
Experts were of the view that diversification of hotels may lead to cut in Average Daily Rate (ADR), with ADR in the region already has dropped slightly during 2015.
In his special presentation on the ‘changing face of luxury hotels’, Laurent A. Voivenel, CEO of Hospitality Management Holdings (HMH) talked about the biggest growth markets in Mena region.
He said, “All major Middle East regions have targeted hospitality as key sector for growth and diversification of their respective economies. Among these, Saudi Arabia currently offers huge opportunity for mid-range investment particularly in Jeddah, Riyadh and the Eastern Province. Similarly, Doha, Muscat, Abu Dhabi all look very promising with events such as Dubai Expo 2020, FIFA World Cup in Qatar in 2022, etc.”
In addition, he participated in a panel discussion sharing valuable insights on trends and development in the regional hospitality sector, owner and operator relations, emergence of mid-market sector, M&A activity and future outlook of the industry.
Laurent mentioned, “Egypt has massive opportunity in economy and midscale hotels segment as well as quality serviced apartments.”
He said, “Diversification is no doubt under way with increased interest in mid-market products. These are needed for growing domestic markets as well as to widen appeal for international travellers, be it business or leisure. We are also witnessing an oversupply of rooms in certain markets, which is naturally affecting the ADR.
“Taking Dubai as an example, what we need is a CAGR (Compound Annual Growth Rate) of 9 per cent until 2020, or near doubling the current CAGR of 4.9 per cent to reach the target. This looks like a tall task but is achievable. However, operators and owners would need to tune down expectations. There will be challenges in terms of profitability, potentially lower returns. This could mean getting used to an occupancy rate of 70 per cent.”
The Gulf Today
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