Dubai is still a great place to invest in a hotel according to one of the leading lights in the region’s property industry.
Raj Sahni, owner and founder of RSG Group of Companies, was speaking to Hotel News Middle East after it was announced his company would be building the Sabah Rotana a five-star hotel on Dubai’s Sheikh Zayed Road – the company’s first.
Among RSG Group of Companies’ achievements include the overseeing of the completion and possession of the Qasr Sabah residential project three months’ prior to the scheduled date of delivery – no mean feat by any standards.
The group began life in the 1970s as an automotive spare parts company before it expanded to sectors including property development, hospitality, industrial equipment, investments and real estate.
The group has also delivered residential projects including the Burj Sabha, Al Abbas Tower and the commercial boutique building Bay Square 4.
“The market is saturated here but the fact remains that Dubai is still a safe haven for investors,” says Sahni.
“Before, my return of investment might have been in 10 years but now it will be 14. That is still great and we are more than happy with that, Dubai is very much a safe place.”
Many commentators have pointed to a reduction in room rate as a sign that the market is up against it, but there are compelling reasons to remain positive suggests Sahni.
“There is still a demand for rooms here and while the prices have come down that is simply due to more competition,” he says.
“Dubai keeps moving forward, it has done so for 22 years and will continue to do so. In many ways it is a separate entity to the rest of the Middle East and should be treated accordingly.”
The Sabah Rotana is due to be ready for 2020 but Sahni is adamant that the timing of the hotel is not connected to the advent of Expo 2020, taking place in Dubai at the same time.
There is a push on across the hospitality industry to reach 164,000 hotel rooms and hotel apartments by the time that Expo 2020 comes around.
Some speculators have went as far as to suggest that it could lead to a crash and burn across the sector.
Sahni is not putting all his eggs in one basket however.
“We are not building the hotel for Expo 2020, yes our target is to finish by June 2020 but Dubai has a lot more to offer than simply the expo,” he says.
“Our plan is not just to create a hotel for the six months of the expo, it is to build something for the long-term, there is so much happening in Dubai.”
The market in Dubai is saturated, as Sahni mentions, that is why it is vital for hoteliers to make sure they are offering something unique when opening a new property.
“This is going to be a special hotel with a number of unique features,” he says.
“It will be a high-end hotel but we are not going to have a room rate that starts at 1,000 or 2,000 AED per night, it is going to be around the 450 to 600 range.
“It’s very early to be specific but it will have a range of unique details, we are planning on something very special because there are so many hotels here already, and many more in the pipeline, so you have to be better than others if you want to stand apart.”
Another key factor in Sahni’s decision to get involved in the hotel industry is the level of tourism in Dubai.
“There has always been a focus on planning for tourism in Dubai, it’s a main focus of the government here in the emirate,” he says.
“The type of tourist that is coming to Dubai is constantly changing. We are a very popular destination for visitors from the Russian and former Eastern bloc countries as well as with Chinese tourists as well, of course.
“The fact that Dubai is also only a two-and-a-half hour flight from Pakistan also opens a huge number of doors for us.”
It is not just the geographical location of the visitors that matters anymore, as Sahni explains, equally important is their mindset.
“The Millennials are coming, they want to be free to roam about all day and do not want to have to pay premium prices to stay in a hotel,” he says.
“We have to ensure they get value for their money. We will still have the fantastic luxury of a five-star hotel but we will also ensure you get great value for it.”
Given the record of Sahni and his team in other sectors, it is hard to see their entry into the hotel industry being anything less than a success.