Why budget means business

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With numerous low-cost brands making a splash in the region, Lucy Taylor takes a look at why budget is booming and considers what it will take for brands to survive in the Middle East.

Home to some of the glitziest, ritziest hotels in the world, the Middle East has become synonymous with high-end holidaying and luxury experiences.

But change is afoot: as the region pours money into establishing itself as a global meetings, convention, exhibition, attraction, entertainment and gastronomy hub, reasons for travellers to stay outside their hotel increase exponentially.

As a result, today's value-conscious travellers are demanding more bang for their buck.

That entails having the option of a decent, modestly-priced hotel where they can get a good night's sleep, rather than having to fork out for top-end accommodation with facilities they won't use. And this is where the budget, low-cost and limited service brands come into play.

Contrary to popular belief, cheaper options do not automatically equate to bad experiences; and the mushrooming of such brands across the Middle East is proving just that. In fact, many are seeking the limited service option.

Who's doing what product?

Numerous global companies are now recognising the value of choice - or at least, in the case of established budget brands, recognising that the Middle Eastern market is ready for such a product.

Having formed a partnership with Emirates Airline, Premier Inn Hotels, the UK's biggest hotel chain, is hoping for similar success across the Middle East.

Following the opening of its first property in March 2008 at Dubai Investments Park, Premier Inn has more than 20 hotels in the pipeline for the UAE alone over the next few years, and is aiming for a total of 80 properties across the Middle East by 2016, with a rumoured investment of between AED 6.4 billion (US $1.7 billion) and AED 8 billion ($2.2 billion).

Another brand at the forefront of the low-cost revolution is Holiday Inn Express, developed by InterContinental Hotels Group (IHG).

The brand, originally known as Express by Holiday Inn but recently altered as part of a global re-launch of the Holiday Inn brand family, is the world's largest limited service chain with more than 1700 properties worldwide.

Last year the Middle East's first Holiday Inn Express property opened at Dubai Internet City. Over the next few years a number of other properties will be rolled out in locations including the UAE, Bahrain, Oman, Qatar, Kuwait and Jordan.

Similarly eager to expand, Best Western Hotels and Resorts, the self-proclaimed 'world's largest hotel chain', recently forged an area development deal with established UAE company Zainal Mohebi Group to start work on a host of projects across the region.

Wyndham Hotel Group (WHG), a subsidiary of Wyndham Worldwide, is another group with plans to introduce its limited-service offerings to the MENA market.

The group is currently in negotiations to launch mid-scale select service brand Ramada Encore in the region, and is also looking at expanding into the UAE with its low-cost brand Days Inn.

Never one to shy away from a lucrative hospitality trend, in 2006 Nakheel's subsidiary company Nakheel Hotels bought the regional master franchise for British budget brand easyHotels.

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