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Thu 11 Apr 2019 08:30 AM

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Emaar Hospitality to 'slow down' on hotel expansion plans

Olivier Harnisch, CEO of Emaar Hospitality, remains positive about the hotel market in Dubai

Emaar Hospitality to 'slow down' on hotel expansion plans
The Dubai-listed hospitality group has 39 projects in its current pipeline, which CEO Olivier Harnisch said “is a lot for a company of our size”.

Emaar Hospitality will focus on its current projects and "slow down" on further expansion, according to its CEO. 

The Dubai-listed hospitality group has 39 projects in its current pipeline, which CEO Olivier Harnisch said “is a lot for a company of our size”.

“We currently operate 18 hotels and residences so we’ve decided to slow down a bit on expansion to focus on the hotels that we are already opening,”  Harnisch told Hotelier Middle East at the Arabian Hotel Investment Conference (AHIC).

Opinion: Dubai's hospitality industry must adapt and evolve

Dubai hotel market fundamentals continue to be relatively strong, and is showing signs that it's now maturing, writes Olivier Harnisch, CEO of Emaar Hospitality Group

Emaar is due to open five hotels in Dubai in the coming months, along with three more Saudi hotels in Meccah, Jeddah and King Abdullah Economic City.

“For us excellence is what counts in operations and in delivering financial results for our owners," he added. 

Oversupply in Dubai

Hospitality analysts STR’s preliminary January data for Dubai indicated performance affected by a continued influx of new room inventory. Dubai reported decreases in occupancy, average daily rates (ADR) and revenue per available room (RevPAR).

Harnisch, who has been CEO of Emaar Hospitality since late 2016, said he remains positive about the hotel market in Dubai, despite the large number of properties opening in the emirate.

"You can look at it in two ways: where Dubai’s market was years ago and where it is heading to. When we look at the future, it seems like a bleak thing because average rates have come down and RevPAR’s are declining compared to the past. But when we take a look around the world, you will realise that Dubai is still doing better [in terms of annual RevPAR] than most cities like Shanghai, Berlin, Amsterdam and Sydney. So I feel like the city is still in a better position," Harnisch said.

“We’ve been blessed with really high growth rates and annual occupancy that was really high, but now the market is maturing and so we need to build hotels are efficiently,” he added.

STR analysts noted that year-over-year declines are to be expected with significant supply growth ahead of Expo 2020. Despite this, demand - measured by room nights sold - grew for the fourth consecutive month.

Efficiency

In an opinion piece written for Arabian Business, Harnisch argued that there's an opportunity for the local hospitality sector to reinvent itself, starting with how hotels are planned and constructed hotels.

"More emphasis must be placed on building cost-efficient properties," he said. 

"A value-minded approach to hotel construction should preferably start at the beginning of a project, not when the largest part of the budget has already been committed, as is often the case," he added.

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