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Mon 18 Feb 2008 08:07 PM

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Is there a need for the middle man?

Is there a chance that hoteliers could continue to develop the industry only at the market extremities?

The strategy for developing a destination, from the perspective of an international hotel operator, is normally quite formulaic.

Bring in the high-end luxury brands to start with, and establish the feasibility and demand for the location.

As the market starts to mature, add in limited service properties to cater to the whole spectrum of travellers.

When the market is at full maturity, there will be brands present to cater to all levels of the market - businessmen wanting a sleep-and-shower experience, young travellers on a limited budget, empty-nesters with a high disposable income and a thirst for luxury.

But until that point - as is being witnessed in Dubai's industry at the moment - the tactic limits portfolio expansion to the very top and the very bottom of the market.

Is there a chance that hoteliers could continue to develop the industry only at the market extremities?

As IFA Hotels and Resorts vice president asset management Patrick Smith explains, many developers are wary to enter the middle of the market because it is often the first to feel the brunt of any downturn in the tourism industry.

And with many of the services and standards at the lower end of the scale blurring the line between mid-market and limited service, there may be a case for hoteliers to delay the introduction of their full spectrum of brands.

It's unlikely, because the considerable brand equity international operators have invested almost demands global expansion to all markets where the operator has flags on the map.

Nevertheless, Dubai is a market that has consistently defied the normal performance expectations of the hotel industry. The question remains whether or not it can defy the historically accepted strategy for reaching full market maturity.

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