|By Lisa Kaaki, Arab News, Jeddah, Saudi
Arabia McClatchy-Tribune Regional News
November 23--Middle East tourism is expected to more than double by 2020. Furthermore, the Arab world is still considered a hot spot among investors in the hospitality sector -- but growth opportunities are no longer conceivable without considering the budget sector.
Experts believe that luxury requires budget and Dubai, renowned for luxurious hotels such as Burj Al Arab, is leading the way. The emirate is beginning to realize that in order to lure more tourists, it needs to diversify its offerings especially in light of the financial downturn.
Dubai has set ambitious targets of attracting 15 million tourists a year by 2015, but experts have been warning for some time that these numbers cannot be reached without the presence of budget hotels. One, two and three star hotels are now operating in Dubai.
The current global financial crisis has created a climate of cost-cutting and a search for alternative economic solutions. Companies are reducing expenses and commercial travelers, looking for value for money, have turned to budget chains in place of the mid-market hotels they had previously used. Moreover, leisure travelers have increasingly considered budget options as a way of making their holiday money stretch. All these new trends are creating an ideal environment for the development of budget hotels to appeal to a wider scope of customers.
"I believe the budget and limited service hotels concept is already a huge success in the Middle East as evidenced by the continuous development of such brands in the region as Accor. Most recently, Hilton announced it is bringing its budget brand to the region. Ishraq's development of the Holiday Inn Express continues at full speed. Our property in Bahrain is under construction along with several others in Abu Dhabi, Muscat, Fujairah and Doha. All countries in the GCC are ripe for the entry of budget and limited service hotels, especially the large Saudi Market," says Sami Al Ansari, CEO, Ishraq Gulf Real Estate. Other low-cost brands announced for the region include Hilton's Garden Inn in Saudi Arabia, easyHotels in Dubai, and Rotana's Centro in Dubai and Abu Dhabi.
Darroch Crawford, managing director of Premier Inn, said, "The limited-service hotel sector presents the best opportunity in the hospitality sector in these times as even more individuals, and certainly most businesses, look for value for money. We are offering guaranteed consistency at a low price that will be in big demand. Lower operating costs allow budget hotels to make excellent returns, even at modest occupancy levels. There are good investment opportunities, particularly as land and construction costs are returning to more realistic levels. The best opportunities lie in GCC capital cities where the limited-service sector currently has little or no representation."
Not too long ago, luxury hospitality was enjoying an unprecedented economic boom and that growth triggered interesting innovations through the development of boutique hotels, lifestyle brands and design brands overseen by Bulgari and Missoni for example.
This economic crisis is creating an opportunity for budget hotels which are known to be a recession-resilient product. They offer higher returns than luxury properties as a consequence of reduced investment and operating costs. Although the recession has not hurt everybody, it has hit some clients who are now turning to budget hotels for lower cost offers.
Budget hotels are still little known in the Gulf region, but the present economic situation is also a unique opportunity for budget hospitality to reinvent itself by introducing smart innovations and creative solutions to satisfy an increasing number of demanding customers.
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Copyright (c) 2009, Arab News, Jeddah, Saudi Arabia
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