Dubai-based Hospitality Management Holdings (HMH) on Wednesday announced plans to make its first foray into the budget hotel sector.
The company, which was the first hotel chain in the Middle East to offer alcohol-free accommodation, said it was planning to capitalise on the soaring demand for quality budget accommodation in the GCC.
HMH unveiled its expansion plans with the ‘no frills’ brand ECOS Hotels, saying it had three sites in the UAE under consideration for the first property.
Laurent A Voivenel, CEO, HMH, said: “We are eager to penetrate the largely untapped market for mid-scale and economy hotels in the region with ECOS Hotels that ties together a unique economical and ecological concept.
“To start with we have three different projects under consideration in the UAE and the first of these will be developed in Dubai. ECOS will serve as the ideal address for savvy budget conscious business and leisure travellers looking for quality in terms of basics such as a good bed, shower and breakfast.”
Voivenel added: “ECOS Hotels is a smart choice for investors offering strong investment opportunity because of lower construction and operating costs and quick and high return on investment.
HMH said the number of visitors travelling to the region is projected to double reaching 136 million by 2020 compared to 54 million in 2008.
“The region is seeing phenomenal growth in stopover traffic, rapidly expanding low-cost carriers, inter-regional travel, increased airport capacity and a growing middle class that is fuelling the demand for budget hotels,” Voivenel said.
“In addition, a lot of local and international companies are cutting down on their annual travelling budgets and seeking affordable accommodation. However, existing hotel stock in the Middle East, including the UAE, is predominantly geared towards luxury and up-market accommodation leaving a huge gap and opportunity for budget hotels that we are keen to develop.”
Dubai has given a tax reprieve to investors developing mid-market hotels by exempting eligible hotels from 10 percent municipality fee levied on the daily room rate for a period of four years if the construction permit is granted between October 1, 2013 and December 31, 2017.
Industry sources indicate over 8,500 rooms are expected to open in the mid-market segment in the GCC by 2014. Dubai alone will have 2,443 economy hotel rooms by 2017 in addition to those planned and under construction.
On Monday, HMH said its hotels reported a 10 percent rise in revenue per available room (RevPAR) during the first quarter of 2014.
It also said that average room rates (ARR) increased by 7.2 percent compared to the corresponding period last year.
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