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Fri 16 Feb 2018 10:40 AM

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UAE set to continue to dominate luxury hotel market to 2022

New research reveals 61% of Gulf's luxury pipeline will be delivered in the UAE

UAE set to continue to dominate luxury hotel market to 2022

The UAE will continue to lead the GCC’s luxury hospitality segment to 2022, with 73 percent of existing luxury hotel stock and 61 percent of the region’s pipeline located in the country, according to new research.

Data released ahead of Arabian Travel Market 2018, taking place at Dubai World Trade Centre from April 22-25, shows that luxury properties have increased three-fold in the GCC in just 10 years, with 95 percent operated by international management brands.

Despite taking the lead position, the UAE will face strong competition from Saudi Arabia, which is expected to witness the most significant increase in luxury hotel supply to 2022, with a compound annual growth rate (CAGR) of 18 percent from 2018 onwards.

The research showed that across the rest of the GCC, this figure stands at 10 percent in the UAE, 11 percent in Oman and Kuwait, and 9 percent in Bahrain. 

Simon Press, senior exhibition director, ATM, said: “The opening of such iconic properties as Burj Al Arab in 1999 and Raffles Makkah Palace in 2010, changed the face of luxury tourism in the GCC, as well as the skylines of its major cities. The region may be working to attract a wider visitor mix, but its commitment to luxury hospitality and tourism will not take a back seat anytime soon.”

Historically, Saudi Arabia dominates CAGR trends, with luxury property development from 2013–2017 accounting for 11 percent of the kingdom’s growth in supply, compared to 8 percent in the UAE, 7 percent in Kuwait, 6 percent in Oman and 5 percent in Bahrain.

In 2017, the UAE topped the table, with 35 percent of the year’s pipeline made up of luxury projects; most concentrated in Dubai. This compares to 14 percent of projects in Saudi Arabia, 20 percent in Kuwait, 19 percent in Bahrain and 11 percent in Oman.

Luxury spending in the region’s two largest source markets, China and India, is also on the rise, driven by the increase in high net worth individuals (HNWIs).

According to the research, compiled by Allied Market Research and published by Colliers International, there are six opportunities for further development in the GCC’s luxury segment.

These include the introduction of more boutique hotels of 80 keys or fewer, offering privacy and exclusivity; luxury resorts to cater to the high demand for wedding and honeymoon destinations; iconic properties in prime locations; and nature and heritage concepts such as eco-lodges and glamping. High quality wellness and spa properties and luxury cruises also feature on the list.

Press added: “The GCC’s reputation for world-class hospitality, original concepts and leading F&B have secured its place as one of the world’s most important luxury tourism markets attracting guests from around the globe. The trends we are witnessing are supported by a number of global developments in luxury spending.”

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