Senior hospitality executive has revealed the cost benefits of developing mid-range hotel project in Dubai
A senior hospitality executive has revealed the cost benefits of developing mid-range hotel project in Dubai.
Laurent A Voivenel, senior vice president, Operations and Development for the Middle East, Africa and India, Swiss-Belhotel International, told a conference that a typical plot of land can accommodate 30-35 percent more mid-scale rooms than luxury or upscale rooms.
He added that the cost of construction per key for mid-market hotels too is 20-30 percent lower than 5-star hotels while such hotels "require less investment and take less time to build".
Speaking during a panel discussion at the annual Hotelier Middle East Great GM Debate held in Dubai - attended by more than 200 leading hoteliers - he added: “There are many factors that make mid-market hotels a lucrative investment option for owners.
"The most important is that despite the strong demand only limited budget hotels inventory is entering the market, making the supply and demand dynamics far more favourable for mid-market hotels and, therefore, giving investors a great opportunity to capitalise on.
"Moreover, lower cost of construction, operations and staffing for mid-market hotels contribute to greater profitability of projects and faster ROI.”
Speaking on the key challenges holding back the development of mid-market hotels, Voivenel said: “There needs to be some sort of intervention from the authorities regarding land allocation because in areas where mid-market hotels should be to attract investors, the cost of land is prohibitively high or not available for budget hotels.
"Alternative construction methods such as modular construction should be considered, and approval process eased for these to make the project financially viable. To promote investment in mid-market hotel sector there is need for more flexible financial support infrastructure with increased lending from banks.”
It is widely accepted by the hospitality industry that in order to establish the UAE as a sustainable destination, it is imperative to balance out the supply gap.