UAE hospitality 2020 and beyond

The UAE will need to build more efficient hotels and innovation is the key to longevity in the industry, experts said as they probed key challenges facing the UAE hospitality sector at an event held at the Capital Club, Dubai.

 Hosted by club member Stefano Ferretti, the ‘UAE Hospitality 2020 and Beyond’ session was  curated by Drees & Sommer. Senior executives from the industry examined the practical, structural, legal and financial challenges and opportunities the hospitality industry currently faces. The panel included: Olivier Harnisch, CEO Emaar Hospitality Group, Filippo Sona, head of hotels (Mena Region) Colliers International, Ray Phillips, chief strategic officer, SSH and Elias Hayek, head of Global Hospitality & Leisure Practice, Squire Patton Boggs. The event was moderated by club member Mark Beer OBE chief executive DIFC.

Key take outs of the event:

• Dubai is a buoyant hospitality market. Yields are higher than the world average (5 per cent to 8 per cent), occupancy is higher than the world average, RevPAR is higher than the world average and demand has generally outstripped supply. The prediction is for 5 per cent compound growth year on year.

• Expo 2020 is business as usual for Dubai. The challenge is not post-Expo, but staying ahead of the mega trends and creating new market opportunities.

• Dubai’s source of customers is changing, RevPAR is declining due to the spending patterns of the ‘new’ guest. Tired assets will suffer, so hoteliers will need to plan to refurbish and redesign in the short term and disruptors such as Airbnb are taking hold.

• The impact will be pressure on yields for the asset owners and investors. There will be a shift from revenue to cost focus, and a need for flexibility in design in order to be able to adapt and innovate.

• There will also be a shift from traditional hospitality focus to profit per square foot. The industry will need to build more efficient hotels and effective design will be essential. In order to improve yield, back of house areas, such as big kitchens, changing rooms and office spaces, will need to be minimised as they are expensive and difficult to maintain.

• Innovation is the key to longevity for the hotel industry post Expo 2020. Hotels need to be more experiential and cater for different groups.

• Umm Al Quwain presents a good yield opportunity. With its beautiful beaches and lower land prices, these are new territories that need to be explored.