Comment: The rise of Dubai’s mid-market hospitality sector
CBRE’s Bruno Trenchard says the development of this segment will prove crucial to the emirate’s tourism ambitions
The UAE remains a prime destination, not only regionally, but also internationally, for an increasingly diverse pool of travellers. Home to some of the most opulent properties in the world, Dubai was, until recently, synonymous with luxury travel. However, the local Government has been working hard to diversify its tourism sector to ensure that the country has something to offer every single traveller - regardless of budget. Currently, the sector contributes more than AED 161 billion to the national GDP.
With an ever-evolving offering of unique attractions in Dubai and other emirates, driven by a strategic approach to tourism, the emirate continues to adapt to overcome global economic challenges. And, although Dubai is still excelling with regards to its traditional sea-side luxury properties, the country can now add cultural and adrenaline-fuelled experiences to its repertoire of touristic offerings. Additionally, as the country continues to develop into a global business hub, the UAE is fast establishing itself as home to some of the most prestigious events globally; the arrival of Expo to Dubai in 2020 will further cement this reputation.
The UAE’s pipeline of new hotels (luxury, mid-market and budget) is testament to the Government’s efforts to create a world-class travel destination that’s open to everyone. The number of hotel rooms in Dubai rose to 118,039 (including hotel apartments) in the first quarter of 2019 according to the latest data released by Dubai’s Department of Tourism and Commerce Marketing – representing an increase of 8% compared to the same period last year. The share of hotels in the midscale segment remains relatively constant yet the portion of internationally branded midscale properties is increasing – adding to the quality of the offering and the visibility of the segment for international travellers. This trend is evident across other markets too, as millennial travellers put an increased focus on experiences over excess spending. Dubai is certainly capitalising on evolving consumer patterns by investing heavily in its mid-market segment – recognising the importance of combining quality assurance with value for money - in addition to its growing leisure and entertainment infrastructure. This means that Dubai is now experiencing an influx of new travellers either from new markets such as East Asia or from different backgrounds in traditional source markets such as Europe.
This is not to say that Dubai has abandoned its luxury segment – far from it. Dubai’s ability to ensure consistently high tourism figures is testament to the emirate’s adaptability and forward thinking. Luxury hotels continue to maintain a strong position in the market with high occupancy rates.
Meanwhile the city is also cementing its position as one of the world’s leading MICE destinations with Dubai World Trade Centre Authority figures revealing that the trade hub and events venue hosted 3.43 million delegates - a new record in its history - with a visitation growth of 4% year-on-year in 2018 thanks to 363 MICE and business events taking place. Due to its accessible location and growing importance as a regional business hub, an increasing number of travellers are visiting Dubai for business purposes. The development of the mid-market offering in Dubai comes as a positive trend as companies from the region become more conscious of their travel budgets.
The UAE’s strength lies in its ability to continue to diversify in line with changing market conditions and evolving consumer trends. Ongoing efforts by the government to attract first-time and repeat visitors to its shores by investing heavily in the nation’s leisure and entertainment infrastructure are proof of this commitment.