HOTELIER MIDDLE EAST | May 2019 | Volume 18 Issue 05COMMENT & OPINION
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Affordable hotels
Families and business travellers also tend to
book an experience. For example, they want
to be engaged by the design as well as an
individualised service. Travellers feel that
big hotels feel cold and impersonal. They
want to be free to tailor their stay, not be
struck down by policies and procedures.
Here in the Middle East, and in Dubai, we
are far behind the cities of Los Angeles,
New York, London, Hong Kong and Paris.
Strange, how can we here in Dubai be
lacking behind in something? For one,
Dubai doesn’t lack luxury hotels, with
almost half of the current offering in this
category. In fact, Dubai has spent the last
decade establishing and marketing itself as
a ‘luxury’ destination with a large presence
of international luxury hotel brands in the
offering. The emirate has always strived to
be bigger and better than the competition,
from building the world’s first seven-star
hotel to its tallest tower.
With the growing importance of emerging
millennial travellers, global traveller trends
have shifted dramatically. More and more
travellers, even those who can afford luxury,
are opting to stay in affordable hotels.
Addressing the hotel supply
The reason for this shift includes the rise of
the affluent middle class, especially in Asiawhich has opened up new opportunities for
investors in the GCC hotel industry.
Opening itself to mass markets such
as China and India, the development of
large-scale tourism projects, the trim down
of corporate travel budgets during trying
periods and the consumer behaviour of
millennial travellers, it is important for
Dubai to address the skew of its hotel supply
towards the luxury hotel sector and open its
door to welcome more budget-friendly mid-
market, i.e. 3 and 4 star hotels, into the mix.
We constantly read about more and more
mid-market properties being introduced
with all the big hotel chains announcing new
affordable lifestyle properties. I read daily
about all the positives regarding investing
in mid-market properties, how they havelower investment costs, coupled with
lower operational costs. I listen to all of the
conferences and debates on how the mid-
market properties are the future. All the
analysis and scales are tipped in their favour.
However, in reality with all of the hotels in
the pipeline, in the next couple of years we
expect the number of luxury properties to
rise to 53% from all of the hotels in the city.
Aren’t we listening to the travellers? Don’t
we get them? Is the reason for building
a new hotel an investment opportunity
with a good return on investment or just
another trophy? A recent study by Price
Waterhouse Coopers (PWC) shows that
the often-quoted challenge that supposedly
holds back mid-market hotel development
is the high price of land in prime locations
of make for an
attractive investment
opportunity. I
Developing a mid-
market hotel on the
same plot of land can
result in similar cash
flows for the owners.
If we expect to welcome 20 million
travellers by 2020 and 25 million by
2025, we really need to start thinking long
and hard how will we bridge this gap and
diversify our offering to cater to all the
different guest needs.About the author:
Damir Boshnjak is the hotel manager of
Studio One Hotel, Dubai. He has more
than thirteen years’ industry experience
in five countries. Moving to the Middle
East in 2011, he has worked in hotels such
as the St. Regis Saadiyat Island Resort in
Abu Dhabi and St. Regis Doha, moving to
Media One Hotel in 2017.The Middle East is far behind
New York and Los Angeles
Damir Boshnjak