Following a softening in 2017, the UAE hospitality sector will see a stability in performance, driven by the leisure segment. Due to stiff competition, a number of hotels will undergo renovations to remain attractive, according to analysts and industry executives.
With more than 80 hotels set to open doors in 2018 in the UAE, more than 25,000 keys are projected to be added during the year, hence, it could put some pressure on room rates.
However, industry executives believe that the opening of new attractions will bring in more tourists to the UAE from traditional markets and will help absorb growing market supply.
Filippo Sona, director and head of hotels at Colliers International Mena, believes 2018 is expected to be a year of relatively stable hotel performance, following drops in performance in 2016 and a softening in 2017.
“The more leisure-driven sub-markets in the UAE are expected to see a more stable performance than the purely corporate ones. Similarly, newer destinations and hotels are continuing to put pressure on older hotels,” says Sona.
Leisure demand is expected to further increase with the introduction of new anchors such as La Mer, Dubai Safari Park, Dubai Frame, the world’s longest zipline in Jebel Jais in Ras Al Khaimah and Warner Bros World Abu Dhabi.
Laurent A. Voivenel, senior vice-president of operations and development for the Middle East, Africa and India at Swiss-Belhotel International, looks at 2018 with optimism and predicts that the UAE will remain a strong tourism market next year.
“At the moment the market is led by the supply dynamics whereby we are witnessing a price competition to maintain occupancy levels that was previously missing from the market,” he said.
As a result, the industry has RevPAR contractions in certain parts. However, the market remains robust and continues to generate higher yield than some other parts of the world.
Russel Sharpe, COO of Citymax Hotels, says the industry is witnessing a significant growth in leisure travellers fuelled by various new developments such as expansion of airports, growth of low-cost carriers, new theme parks and shopping destinations.
The UAE, according to Sharpe, has recently taken a huge leap on to the world leisure stage with the addition of nearly 17 major leisure attractions and hence the country is expected to account for 90 per cent of the leisure tourism market in the Middle East by 2020.
Therefore, experiential travel will remain the single biggest driver of growth in the hotel market in the coming years.