By Elizabeth Broomhall
Pipeline continues to be dominated by five-star, despite lack of cheaper alternatives
Luxury properties are still dominating the GCC’s hotel development pipeline, despite the urgent need for mid-range alternatives, the director of a hospitality research firm has said.
Four and five star hotels will continue to spring up around the Gulf states in 2012 and 2013, as owners focus on more lucrative investments, Gavin Samson from Christie & Co, MENA claimed.
“Development pipelines suggest in most markets the emphasis is still at the five and four-star level,” he told Arabian Business.
“If you look at each market, five-star dominates. If you look at the pipelines, five-star dominates. Everybody wants to concentrate on five-star because they think that’s where the money is.”
Moving forward, the Gulf will be forced to consider more mid-range options which are urgently needed in the region to attract a flow of new tourists, he said.
As it stands, every market in the GCC is undersupplied in terms of quality, budget to mid-scale product.
“The Middle East cannot afford to be as picky and choosy as it once was. You have to factor in everybody, therefore you need budget and mid-level,” Samson added.
“Eventually there will have to be a shift as people demand more value for money, as prime sites become unavailable and as credit conditions get tighter.”
Scores of luxury properties have opened around the region in the last year, including the Rocco Forte and Jumeirah Etihad Towers in Abu Dhabi, the St Regis in Doha and the Missoni in Kuwait.
In the pipeline, tens of high-end properties are still due to launch, with the Ritz Carlton due for Oman, the Four Seasons still to come in Abu Dhabi, the Banyan Tree to open in Doha and the Park Hyatt to launch in Riyadh.
Few projects are underway on the mid-range side, but some hoteliers have made moves to tap the market.
Abu Dhabi-based firm Rotana said in June it planned to open 25 mid-market hotels across the Middle East by 2015 under its low-cost brand Centro.
“More people are traveling and looking for budget hotels,” president and CEO of Rotana Selim El Zyr told Arabian Business at the time.
“In the UK you have got thousands of budget hotels, but in the Middle East, the only option for travellers has been four or five-star hotels which a lot of people can’t afford, or three star hotels that are individually operated and mostly run down.”
Other industry experts have also predicted a boom in cheap but chic hotels, which they believe will help revolutionise the industry in the same way budget airlines have shaken up aviation.
Jones Lang LaSalle said in May last year that a rapid growth of mid-range hotels in the region would likely mirror Europe’s budget hotel growth two decades years ago, with Saudi holy cities Makkah and Medina leading the way.