Hotels in UAE get Expo-ready
As Laura enters her boarding gate, she looks around and sees a massive Emirates A380 aircraft with an Expo2020 branding. Large enough to get eyeballs rolling, the branding on Emirates aircrafts marks the onset of the magnum opus event.
Like Laura, many tourists have plans to travel to the UAE to witness and participate in the Expo2020. According to reports, UAE is expecting close to 25 million tourists in the country and is expanding the infrastructure to accommodate the needs and demands of the expected tourists. A report from Earnest and Young states that Dubai Expo 2020 will have contributed Dh122.6 billion in value to the UAE’s economy by 2031. While the Expo will impact almost every industry in the region, the most change-prone industry inevitably is that of travel and tourism.
“The tourism industry has undergone a lot of changes during the last couple of years,” says Kamila Siedlecka, Director of Room and Guest Experience at Renaissance Downtown Hotel, Dubai. “Everybody has Expo2020 on their agendas as a part of their strategy as a priority. And a lot of people are going to benefit from the same.” In-fact, in the UAE alone, there are 107 five-star hotels as of the first half of 2018 and close to 50 more are set to open by 2020. In the mid-sized range (three-star hotels), there are about 75000 rooms available which makes up for 67% of the total hotel room supply as of June 2018. This shows that the competition in the hotel industry is growing by each passing day. How then are hotels managing to differentiate themselves and cater to increasing occupancy rates?
“As a direct-result of the Expo, trends have shifted towards re-purposing and refurbishments to an unprecedented scale,” says Sameer S. Siwani, Design Principal & Managing Director - BE: Consultants. When the expo was announced, everybody was anticipating the construction of new hotels but due to prevailing financial circumstances, many owners and operators decided to resort to refurbishments of existing properties instead. “Business-wise, aged properties have a distinct advantage; ie: existing reputation, ratings, good-will and bankable clientele. Financially, cost of re-purposing is one-third compared to new-build; and in addition, the property remains partly-operational during refurbishment hence earns revenue and maintains client-patronage and loyalty.”
Apart from these, the tourism industry is also witnessing an increase in usage of previously unused areas which are adding brownie points to the hotel’s appeal. “Redundant F&B spaces are being re-purposed to more relevant uses such as business-centers, collaborative work-spaces, meeting-suites, etc. There is also focus on elevating the quality of common-amenities that guests can enjoy together; ie: library-lounges, pool-decks, health spa-suites, inter-active cooking stations, food-halls, all of which improve overall guest-experience a lot better than just added creature-comforts to individual rooms. The addition of all of these clever-features coin the 'expo-ready' phrase.” In a country where tourism represents 20% of the emirate’s GDP which is expected to rise to 72% by 2026, such interesting developments will not only save a lot of funds but will also help create new concepts that would only add to the customer’s benefit.
However, with an increase in the number of rooms and offerings due to growing competition, the prices are expected to go low. According to Oxford Business Group, there has been a reduction in hotel service charge from 10% to 7%. Although strong, Dubai’s Revenue per Availability Room represented a 6.2% decrease on a year-on-year basis. In conjunction with this, average room rates in Dubai fell by 4.4% in 2017, to $243, as occupancy rates fell 1.4 percentage points.
“Prices are being driven lower and lower which tells us that previously they were not offering good value and/or there wasn't enough competition,” says Ryan Gazder, Founder, HCTS Hospitality Consultants. “Lower costs can be managed if there is high volume and there are economies of scale that say a 1000 room hotel can manage in terms of deals with transportation agents that a smaller property cannot manage.”
He feels that hotels will curate special hospitality packages to attract more visitors. “…These can be long-stay and short-stay packages especially geared to cater to the needs of expo visitors. There would be combinations of half-board and full-board deals along with airport transfers and transportation to the expo along with passes to some local attractions.” While he feels that the service standards or trends haven’t changed much, he notices some major renovations taking place to ensure that the hotels are up to date and refreshed for the additional demand from Expo visitors. Kamila seconds Ryan and confirms that she too is in talks for collaboration not only with the Expo team but also with existing partners and new partners. “The idea is to build a strong base so that we all benefit as a whole,” she adds.
The hotels, however, are not only preparing for the Expo2020 but are also spending a considerable amount of time planning for the era post the expo. According to Sameer, the endeavors to achieve 'expo-ready' status are not being governed by haste or myopic vision. “There is a more sustainable view; and therein lie the merits of current discretion and modesty. The number of new-build hotels are largely in the vicinity of new-international airport and existing business-hubs; and these will continue to support visitors to Dubai way beyond the post-expo era. So this is mindful of a long-term vision of Dubai to be an unparalleled logistic and business hub besides the expected influx of pleasure-seeking visitors.”
As per Kamila, she doesn’t expect a massive impact of the Expo2020 on their hotel. She expects more impact on the hotels located close to the Expo area or the airport. “Expo2020 is a part of our strategy but we’re not putting all our eggs in one basket,” she says. She is looking at maintain successful collaborations which would benefit her post the expo as well. “The Expo area will not be redundant. There are talks that it will be converted into an area with smaller pavilions with different events happening so its not like post the expo, there will be no activity in the region.”
With many preparations in line for the Expo, hoteliers and hospitality consultants are quite positive about its impact. “There isn't the slightest doubt that Dubai will live-up-to its reputation of achieving an extra-ordinary expo-event site; and that will provide the high-impact spectacle. The rest could simply play a supporting role,” concludes Sameer.