According to Bruno Trenchard, senior manager, Hotels and Hospitality at CBRE Middle East, investors in the region had a more cautious approach at the beginning of the pandemic, but the second half of 2020 restored some of that lost confidence.
“It’s safe to say the COVID-19 pandemic had an impact on the market overall,” says Trenchard. “Many construction projects have been slowed down, especially those in initial stages of construction, but few projects already under construction have been completely cancelled. The second half of 2020 witnessed a few new openings – a positive sign for the market overall.”
He says hotel investment in Dubai benefits from positive perception “as most governments use tourism as a major element of their strategy to diversify away from oil revenue. As a result, there’s generally positive sentiment towards investment in the tourism-and-hospitality sector.”
Because of this growth-oriented market direction, most investment in the hospitality sector in the region is made towards new developments rather than buying existing assets.
Dubai has always been one of the most important markets in the Middle East for Wyndham Hotels & Resorts, says Dimitris Manikis, Wyndham’s EMEA president. “[Dubai] has fast become one of the world’s most-popular tourist destinations. The state-of-the-art technology and infrastructure, tax-free living and strategic location in the centre of the major trading continents makes Dubai extremely appealing from an investment standpoint,” he explains.
The region has been known for its luxury properties since tourism really started to pick up in the 2000s and, while this is still the case for a number of investors, Trenchard says more hotel owners are realizing the benefits of three- and four-star hotels, which bring with them lower investment cost, better profitability and higher returns in most cases. “Hotel transactions are still very focused on the higher end of the market, but we see more and more new developments in the three-star segment,” he adds.
For Wyndham, its upper-midscale La Quinta by Wyndham brand is on a strong growth trajectory in Dubai. “Dubai is one of the most popular, year-round destinations for travellers from all corners of the globe, making it the ideal location to launch La Quinta in the market,” explains Manikis. “This latest addition further highlights our commitment to expanding the brand in EMEA (Europe, the Middle East and Africa).”
The UAE has been at the forefront of the Coronavirus crisis and, says Manikis, the acceleration of the vaccination program is hugely promising for the rebound of the hospitality sector. “In 2019, the UNWTO (World Tourism Organization) suggested that the Gulf Cooperation Council (GCC) is poised to attract 195-million visitors by 2030 – above the global average for any one region. While this trajectory has naturally been disrupted by COVID-19, the travel sentiment following the roll-out of the vaccine program is becoming optimistic.”
Looking to the future, Sheikh Mohammed bin Rashid Al Maktoum, vice-president of the UAE and ruler of Dubai, recently unveiled the Dubai 2040 Urban Master Plan. The plan aims to transform the Emirates by creating a truly interconnected, people-led city and becoming the world’s best city to live in.
“Over the next 20 years, Dubai will tackle ambitious plans – including increasing land for hotels and tourist activities by 134 per cent and increasing the space of public beaches by 400 per cent,” says Manikis. “The growth of Dubai is exponential and will continue to be a key destination for Wyndham and our hotel partners.”
In fact, Wyndham has extensive expansion plans for the region. “This year, we’ll be opening the first Days by Wyndham hotel in Dubai, which will mark the entry of the Days Inn brand in the UAE,” says Manikis. “We’re also opening Howard Johnson Plaza by Wyndham in Dubai, which will join the recent additions of Wyndham Dubai Deira and Super 8 by Wyndham Dubai Deira, which both opened in late 2020.”
Trenchard says Dubai hotel investment is mostly driven by new developments “and we don’t expect this to change in the near future. The growth prospects in number of tourists in the medium term are still justifying the construction of new hotels in the eyes of many developers.”