Arabian Travel Market 2016 Series – Part 1: How is Dubai embracing mid-market travel requirements?
INTERVIEW WITH CARLSON REZIDOR HOTEL GROUP AND EMAAR HOSPITALITY GROUP
With a background of several years in luxury hospitality, my knowledge of the mid-market sector was limited. But with mid-market travel announced as the theme for Arabian Travel Market 2016, I decided to undertake my own research in preparation for moderating and speaking roles at the exhibition.
Interviewing mid-market hoteliers Mark Willis, Area Vice President Middle East & Turkey at the Carlson Rezidor Hotel Group, and Jaidev Menezes, Corporate Director Business Development at Emaar Hospitality Group, I took the opportunity to learn why this segment is growing in Dubai.
What factors do you think have stimulated the need for mid-market options in Dubai?
Mark: More owners are seeing the attractive model and offering of mid-market products in terms of development costs and operational efficiencies, hence from an investment perspective. This is also a result of the growing demand for more affordable, branded accommodation across the Middle East. The need for budget and mid-market hotels is needed more than ever as Dubai works towards attracting growing numbers. Park Inn by Radisson is a brand and product that offers a real estate efficient, midscale product to cater to not only mid-market demand, but also the new and evolving generation of travellers.
Jaidev: The rise in demand for mid-market value hotels is logical if you look at the historic trends of Dubai’s hospitality sector. The industry has typically focused on luxury hotels with over 60% of the total inventory of rooms under the ‘luxury’ bracket. As Dubai broadens its appeal to a more diverse audience from a wider geographic footprint beyond Europe and the GCC, there is a significant increase in demand for mid-market hotels. A growing number of travellers are seeking more value than frills whether that be the global nomad, Generation Y explorer or adventurous families; they all share the desire for making a discerning choice when it comes to accommodation. This has led to an increase in demand for more affordable properties. Further, with Dubai preparing to host Expo 2020, that is set to welcome over 25 million visitors during the six-month period, it is important that the city cater to all segments of tourists. Rove Hotels meets this demand for affordable mid-market hotels.
Are there any particular markets that are stimulating such growth?
Mark: Innovative products, as well as lifestyle select brands, as a new niche in the market will continue to target well-travelled millennials who seek choice and comfort rather than luxury.
Jaidev: There is demand for affordable hotels from all markets – including the traditional inbound markets of the GCC region and Europe – principally led by young families and Generation Y travellers. Further, there is increased demand from the growing middle-class segment from the Indian Subcontinent and African nations, who have high disposable incomes, are frequent travellers and prefer affordable hotels. The business and MICE sector is also an important segment for mid-market properties as they seek new experiences in new destinations at affordable prices.
In your experience, do you feel mid-market hotels appeal more to a leisure or business traveller?
Mark: In the current economy, I believe that mid-market hotels probably appeal more to business travellers because of the fact that oil-related companies are cutting costs and so prefer to book their travelling executives into mid-market hotels. But there is also growing demand from leisure visitors. While affordable hospitality is a relatively new concept in the Gulf, it does mean there is enormous opportunity for growth and increasing market share.
Jaidev: Rove Hotels will appeal to both business and leisure guests as these properties are envisaged to be modern, cosmopolitan, smart and cultural. The properties serve as tech-savvy, social and cultural hubs for international explorers whether they are visiting a city for business or leisure or both.
With a mid-market product in your Group, how does your marketing differ compared with a luxury property?
Mark: Because our mid-market properties tend to attract a greater share of millennials than luxury properties, our approach is very much geared towards connecting with them digitally. Millennials engage with brands more deeply through social networks and are highly visual. They rely heavily on the opinions of others and will go online to review brands and products before making a purchase, so a highly interactive online presence is central to our marketing efforts. We recognise that this target audience tend to use their mobiles as their primary device for consuming content and information and so we also run mobile marketing campaigns to attract this market.
Jaidev: Rove Hotels has a very unique and distinct brand identity and tone of voice conceived to appeal to our target audience. Our approach to marketing is in keeping with the brand with our communications and content playing a very important role.
What traveller trends are you seeing in the mid-market sector?
Jaidev: Our world is getting smaller in terms of accessibility with low-cost airlines making exploring the world a lot more available to the younger generation, the worldly-wise budget traveller and the new generation of entrepreneur who are always connected and have a global outlook to growing their businesses. Dubai is clearly on their radar now when perhaps five years ago it was perceived as a luxury destination only. This type of visitor to Dubai seeks affordable, value hotels that offer them smart connectivity in central locations. We also see more corporates and businesses seeking affordable quality hotels.
What are the important room amenities and services that the mid-market traveller demands?
Mark: Luxury should not be associated with mid-market hotels, but rather with comfort and lifestyle. This includes basic needs of the customer ranging from a comfortable bed and room design, clean, fresh and modern interiors, healthy choice of cuisine and streamlined connectivity. We are proud to offer these in our midscale Park Inn by Radisson and in our lifestyle select Radisson Red hotel brands.
Jaidev: We have taken special care to ensure that the amenities we offer meet the requirements of our target audience: locations, access to public transport, connectivity, a 24-hour gym and Laundromat. Our dining options are also flexible, affordable and support the spirit of community facilitating the opportunity to meet new people and make new friendships or business partnerships.
What is the future for mid market travel?
Mark: One of the emerging trends in the global hospitality industry is the growth of the midscale segment for city hotels. And this is an emerging trend across the Gulf. We plan to grow our portfolio of Park Inn by Radisson properties over the next few years. As centres of trade and industry, the growth of this mid-market brand will serve many of the destinations in the Middle East well as they seek to transform their hospitality industry into one that is diverse, dynamic and inclusive.
Jaidev: We see this segment as a high-growth sector that will continue to gain traction in the future. The key is to ensure that mid-market hotel brands meet the requirements of travellers and that is what we aspire to deliver. We have also created a brand and an experience that is unexpected in this category and where people will be happy to share their experiences, tell their friends about the brand and come back again and again.
What other plans do you have for other mid-scale projects around Dubai and across the region?
Mark: We are looking at a continued expansion into Dubai’s various submarkets with our midscale Park Inn by Radisson brand. A similar strategy applies to other major cities across the region such as Abu Dhabi, Doha, Riyadh and Jeddah, as well as secondary cities in Saudi Arabia and the UAE to complement our primary city expansion. We already have hotels and serviced apartments under this brand in operation or under development in these markets. We are also looking at recovering markets such as Beirut and Cairo if the markets open up sufficiently.
Jaidev: Our first property Rove Downtown Dubai will open in 2016. We have plans to open five other properties in the coming years in Al Wasl, Port Saeed, Al Jafiliya, Oud Metha and Dubai Marina. Our goal is to roll out 10 Rove properties across central locations in Dubai and the region by 2020.