Dubai is seeing a significant shift away from luxury hotels to mid-range properties with almost 50 percent of new rooms to open this year having a three-star or lower rating, a new report has revealed.
The study published by Jones Lang LaSalle (JLL) for The Hotel Show Dubai 2015 shows that 44 percent of the 3,600 new hotel rooms to enter the Dubai market in the final months of 2015 are mid-market.
JLL previously reported that of a supply of almost 65,000 hotel rooms in Dubai in the first quarter of 2015, 44 percent were 5-star rated.
However its new report showed that the near-saturated luxury market is set to be rivalled by a supply of lower-graded properties with more competitive room rates, 44 percent of which are forecast to be graded 3-star or less and a total 69 percent at 4-star or less.
“In the first quarter of 2015, only 29 percent of the current room supply is reported at 3-star or less,” said Christine Davidson, group event director of dmg events hospitality portfolio which includes The Hotel Show Dubai.
“The new statistics revealed by JLL represent a significant shift for a market near dominated by 5-star-or-above rated hotels, including the only 7-star property in the world.”
Davidson added: “Almost 4,000 new rooms entering the market this year will bring the supply of rooms in Dubai close to 70,000 in 2016.”
Laurent A Voivenel, CEO of Dubai-based Hospitality Management Holdings (HMH), said: “Dubai might be considered one of the most luxurious cities in the world, but hoteliers entering the market need to continue this trend and accelerate the development of budget room options to cater to demand from the growing middle classes, shorter-stay passengers travelling through Dubai International Airport, now the busiest in the world, and attract new travellers from the emerging economies of Africa and Asia.
"This is a smart choice for investors due to lower construction and operating costs and quick and high return on investment. At HMH we are penetrating this segment with our ECOS Hotels, introducing to the Dubai market in 2016 a ‘no frills’ B&B brand tying together a unique economical and green concept.”
The report also said that Dubai’s appetite for luxury is still present as alongside the 5-star Palm Tower on Palm Jumeirah, some of the most luxurious properties the city has seen will open in coming years.
2015 openings include 5-star Palazzo Versace at Dubai Creek, movie-themed Paramount Hotel in Downtown, Starwood’s first St Regis Dubai on Sheik Zayed Road, and the first Hard Rock Hotel in the Middle East in Marina 101, the second tallest building in the UAE behind the Burj Khalifa.
The Hotel Show Dubai will take place September 28-30 at the Dubai World Trade Centre, with over 650 international exhibitors.
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