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|20 September, 2018

UAE's mid-market properties add value to growing hospitality sector

Mid-market properties will continue to add value to the UAE's hospitality sector in the coming years, however, operators will need to align their strategies

UAE, skyline of Abu Dhabi at the waterfront, beach. Image used for illustrative purpose.

UAE, skyline of Abu Dhabi at the waterfront, beach. Image used for illustrative purpose.

REUTERS/ Malorny

UAE - Mid-market properties will continue to add value to the UAE's hospitality sector in the coming years, however, operators will need to align their strategies with international expectations.

Speaking in a panel session at the Hospitality Leadership Forum, experts also noted that many owners are taking a more realistic outlook, when dealing with the mid-market segment.

"The mid-market segment is really coming to the forefront right now," said Mark Lee, general manager, Media One Hotel. "There are lots of incentives to focus more on the segment nowadays, and owners have become a lot more realistic when they look at market conditions. This is evident when they are looking at investment opportunities. Before they never really had the option, but now, looking at the success of the mid-market hotels, they are seeing that there is a guaranteed return on their investment."

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Lee also added that operators will need to be a lot more creative with their offerings moving forward. This viewpoint was shared by Guzman Muela, general manager of TIME Oak Hotel & Suites, who further shared his observations on strategy. "Align your offerings to the expectations that you see in the rest of the world, otherwise you won't be able to sustain the business," he said.

"Look at markets that are fast emerging in terms of volumes, such as China. Do your research on what type of prices they are looking at, and then adapt your offering to cater to that segment." He added that as Dubai and the UAE's hospitality industry continues to mature, there is a shift to compensate the upper segment properties. However, this means that the expectation of the service at the mid-market properties has not lowered; in fact, guests are looking for four-star experiences at three-star prices, he said.

"There is a lot of focus on value today," agreed Nayla Chowdhury, general manager of Hampton by Hilton Dubai Airport. "People are looking for quality deals at affordable rates. There are several choices in Dubai for the mid-market segment, but it is still not at the point that we should be. Guests are looking for something that is going to fit their purpose. Price is the biggest decision factor, definitely, but there are other things that they look for. Dropping the room rates to tempt guests into booking is easy, but this will not be the obvious answer going forward."

She added that investments in the segment will become a lot more aggressive in the coming years.

"It will pay to have a very good and sound commercial strategy moving forward," she said. "When you are launching a brand here, remember to stay true to your core offerings, but also look at ways to bring in something that will hint at the regional culture."

"You have to look at the location, the community that you will be serving, and the f&b propositions that you have," noted Lee.

"Dropping prices at five-star properties are having a huge impact in the market right now. The market has to sort itself out, especially when it comes to price points. Unless the market stabilises, there are going to continue to be friction points. However, it is not going to be a problem to convince owners that the mid-market segment is a viable model."

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