There is a tough period ahead for hotel owners in the short term but they can expect a return to growth in a few years.
That was according to the Alpen Capital Hospitality Report that was released ahead of the Gulf and Indian Ocean Hotel Investors Summit (GIOHIS) conference that starts in Yas Viceroy, Abu Dhabi, on 6 February.
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It’s expected that visitors from new markets such as India, China, Far East and Saudi Arabia will help the Middle Eastern market, which is currently “under pressure”, to recover in the long term.
“Diversification in new source markets will eventually allow a recovery in hospitality industry performance levels as emerging inbound markets gain traction,” says Simon Allison, CEO of HOFTEL, leading association of hotel property investors and organiser of GIOHIS 2017.
He added that hotel owners are increasingly concerned about the long-term trends in the sector.
Allison commented that owners are usually far smaller than their business counterparts such as brands, OTAs and lenders, and so face a struggle securing the right deal.
He said they are still paying much the same fees to the brands as they were before the rise of the OTAs – and are now paying OTA commissions on top.
“That’s hitting margins and owners are looking for ways to unite and leverage their combined strength – a theme that will be a key focus of GIOHIS,” he said.
“If they can do that, they will benefit fully from the upturn, when supply and demand stabilise.”
Marko Vucinic, SVP MENA, Hotels and Hospitality Group, JLL MENA, said there is now a focus on attracting visitors from India and China in particular.
“The UAE market will remain under pressure in the short term, while in the long term we expect more positive sentiment,” he said.
“The UAE is currently building its place on the international map with the addition of new leisure, entertainment and tourist offerings.”