With Michael Weyland, General Manager of Citymax Hotels
By definition, mid-market hotels (also commonly known as budget hotels), are establishments that fall between 2-4 star rankings and often offer premium services at rates considerably lower than 5-star hotels. These hotels tend to be more functional than 5-star hotels, with location and practicality more important than amenities more suited to a resort stay e.g. a water park or beach. However, that’s not to say that these mid-market hotels will lack in comfort, style or facilities.
The reality of the hospitality situation in the current economic climate is that more and more people are becoming conscious about their spending. The financial crisis has left companies and individuals trying to get more value for their money, especially frequent business travelers, which explain why mid-market hotels are so successful in the region. Here is a quick overview of the U.A.E. mid-market hotels:
- Current number of mid-market hotels: 70
8 (2-star)
18 (3-star)
44 ( 4-star)
- Current room Capacity: 15,109
- Total number of mid-market hotels by 2013: 107 (34% increase)
- Total room capacity of mid-market hotels by 2013: 26,782
The above numbers are a clear indication of the increasing demand of mid-market hotels. Our research has shown that current investments in this market are over $1.57 Billion in the U.A.E. alone, an astronomical amount compared to reports by 5-star hotels that announced big losses and a decline in investments over the past few years. The breakdown of investments is:
- $123.68 million by 2-star hotels
- $387 million by 3-star hotels
- $1.065 billion by 4-star hotels
On a broader scale, we anticipate a 44% increase in the number of mid-markets hotel in the G.C.C. as a whole, based on announced and ongoing projects. There are currently 134 mid-markets hotels in the G.C.C., which will be increased up to 234 hotels by 2013, shifting the room capacity from over 25,000 to over 50,000 rooms.
Amine Hamdani, Vice President CB Richard Ellis Hotels, the hospitality division of the global property consultancy said: “There is a saturation of 5-star hotels in the UAE market and there is a definite need for a supply of quality mid-market accommodation options. Fortunately a number of companies seem to be adopting this operating model and we are seeing more of these properties being announced. These properties will further develop the UAE as a premier holiday and business destination and will open up the region to a broader spectrum of travelers”
