BRIC countries key to sustaining hotel growth, say industry experts at The Hotel Show

Senior hotel officials have identified markets in Asia and South America as drivers for growth in the hotel sector in the Gulf, particularly for Dubai where demand is only limited by the number of available airline seats.

Speaking at The Hotel Show Summit, Thomas Grunder, VP of Global Sales for Jumeirah, said the group was very comfortable about expansion going in to the future: “People want to come to Dubai and diversification of the hotel sector with more luxury and more exclusive hotels as well as three-and four-star properties means the emirate can now approach different customer bases to fuel growth.”

China and India were cited as key to future expansion in the sector, while Grunder pointed to the fact that recent events had demonstrated the effects of the numbers game: “The CIS has been strong in Egypt, for instance, and if we could shift that market (to Dubai) by just 10 per cent, we would not have enough rooms.”

Fellow panel speaker, Marc-François Dardenne, CEO of Emaar Hotels & Resorts, emphasised it was not only China, but other emerging markets that would sustain development in the future.

“We are targeting countries closer to home in the first instance – the GCC and India – but will be setting up sales offices in China and then look at Brazil and Africa as source markets,” he said.

Delegates at the summit were in agreement that airlines such as Emirates, Etihad and Qatar Airways would fuel development of the region by fulfilling the cross-roads designation of the region. The Gulf’s geographical location is undoubtedly one of its major strengths, providing a natural link between East and West. Moreover, its access to Russian and Indian markets specifically gives the region a strategic advantage.  

“The role of the airline is crucial in working hand in hand with hotels, and this has been the business model of Dubai from day one,” said David Vely, SVP Middle East/North Africa Development, MGM Hospitality.

“The geographical position of the region is a strong asset in tapping in to feeder markets.”

Assessing the current health of the hotel sector region-wide, Elie Younes, VP Business Development, Rezidor Hotel Group, said one lesson for hoteliers from the past few years was that business had been and always would be cyclical.

“For instance, in 2010, Egypt was a top performer and our hotels had an unbelievable year,” he said.  “While that situation has changed, for the rest of the region, there are not yet enough indicators to say whether the bad times are behind us.

“There are signs of recovery in the UAE and Saudi Arabia although confidence has not fully returned yet, while Beirut is under-performing and there are inherent issues in the Kuwait and Qatar markets, with each having to position differently to diversify from their major corporate base.”

Questioning whether hotel rates in the region would remain high, the experts agreed that the expansion of three-and four-star hotels in most markets would serve to pull down average daily rates (ADR) which have remained among the world’s most expensive for many regional cities.

“For the first quarter in 2011, average occupancies in Dubai hotels were back above the 80 per cent mark, and while average daily rates have taken a plunge, they still exceed US$200,” said summit moderator, Jalil Mekouar, MD-Hotels, Jones Lang LaSalle, pointing out this was greater than Hong Kong, Paris, New York and London.

“Room stock in the region has historically been at the high end but as the supply gets balanced with big opportunities for three-and four-star hotels opening up, this will bring down average rates,” commented Rezidor’s Younes.

Exhibition Director of The Hotel Show 2011, Frederique Maurell noted that the international spread of exhibitors at the event demonstrated the strength of the regional hotel sector and how it was perceived as an area of enormous potential.

“As the world has emerged from economic woes, the hospitality industry in general is looking to regroup and expand, and we are delighted to welcome such a global spread of visitors and exhibitors to explore opportunities for business in the region,” she said.

Now in its twelfth year, The Hotel Show, the region’s premier trade show for the industry, opened yesterday at the Dubai World Trade Centre.

It covers more than 22,000 square metres of exhibition floor space, showcasing the latest products, services and technologies from all aspects of the hospitality and leisure sector. The event has a distinctive international feel this year with 400 exhibitors representing 25 countries are showcasing more than 500 products.

Official platinum sponsor is Al Aqili Furnishings. Through an agreement with dmg events in Dubai, organisers of The Hotel Show, the Dubai Government - Department of Tourism and Commerce Marketing (DTCM) is strategic partner for this year’s hospitality showcase.

For more information about The Hotel Show, please visit: www.thehotelshow.com