UAE hotels among the ‘highest profitability levels in the world’

Hotel food and beverage demand underpinning profits, says STR Global managing director

The profitability of hotels in Dubai is unattainable elsewehere in the world, says STR managing director.
The profitability of hotels in Dubai is unattainable elsewehere in the world, says STR managing director.

UAE hotels are among the ‘highest profitability levels in the world’, with hotel food and beverage demand underpinning profits, according to managing director of STR Robin Rossmann, who leads operations across Europe, Middle East and Africa, Asia Pacific, and Latin America.

Speaking exclusively to Hotelier at the Arabian Hotel Investment Conference in Ras Al Khaimah, UAE, Rossmann said  that  one of the ultimate elements underpinning investment in hotels across the region is that they are among the highest profitability levels in the world. He revealed that one of the elements underpinning that is the strength of hotels in terms of food and beverage.

“This is because they [hotels] are already the epicentre of demand for local communities and for tourists, especially for western cultures that want to have alcohol and the only place you can do that is in hotels. It creates a lot of demand and it is profitable demand,” he said.

Did you like this story?
Click here for more

He went on to highlight how food and beverage offerings in hotels in the UAE generate profit margins of around 40%, compared  to New York where profit margins are 0%, Paris at about 6%, and London at 25-30%, due to the higher labour costs and lower demand in the latter three cities.

Speaking about hotel profits in the region, he said that historically the region, and Dubai particularly, has had incrediblly high levels that are unattainable anywhere else. “They [profit levels] have come down now,” he said, “and obviously hoteliers are not going to be happy about that. However when you benchmark that on a global scale, returns are still pretty good here.”

Speaking about the future of the region’s hotel sector, Rossmann said that because supply is increasing, a lot will depend on the ability of the region to continue to grow demand. “It has got the levers to do that,” he said, “but that doesn’t mean it will be easy. It will get bumpy; there will be years when there will be declines, and we expect 2019 is going to be a tough year.”

He pointed out, however, that ultimately, hotels are long term investments, over a period of 25-50 years. “You have to take a view on your belief in your destination as a whole and ultimately travel and tourism is a very strong and growing industry globally. If this region can do what it needs to do to attract those travellers then it is difficult to bet against,” he said.  

For all the latest hospitality news from UAE, Gulf countries and around the world, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page.

Most Popular



Human Capital Report 2017

Human Capital Report 2017

The second annual Hotelier Middle East Human Capital Report is designed to explore the issues, challenges and opportunities facing hospitality professionals responsible for the hotel industry’s most important asset – its people. The report combines the results of Hotelier Middle East's HR Leaders Survey with exclusive interviews with the region's senior human resources directors.

Hotelier Middle East Housekeeping Report 2016

Hotelier Middle East Housekeeping Report 2016

The Hotelier Middle East Housekeeping Report 2016 provides essential business insight into this critical hotel function, revealing a gradual move towards the use of automated management and a commitment to sustainability, concerns over recruitment, retention and staff outsourcing, and the potential to deliver much more, if only the industry's "image problem" can be reversed.

From the edition

From the magazine