Andrew Clough, SVP development, Asia Pacific and Middle East, Hilton Worldwide and Carlos Khneisser, vice president of development, Middle East, Hilton Worldwide tell Sophia Soltani why mid-market hotels make more sense than ever and how Hampton by Hilton and Garden Inn are set to make waves in the mid-market segment.
In recent months it has become apparent that Dubai is undergoing a market shift towards the increased development of mid-market properties, underpinned by government initiatives, the rise of the Gen Y millennial traveller and the growth of the middle class in key source markets who are looking for price stability and value for money.
And as Knight Frank’s July 2015 ‘Hospitality report – Dubai’s mid-market hotel sector – stable performance in turbulent waters’ highlighted Dubai’s mid-scale RevPAR growth and a significant dip in the luxury segment. The research paper showed that in the first quarter of the year occupancy fell by 2.2% with average daily rates falling by 5% resulting in a 7% YoY RevPAR dip.
And in light of the recent statistics, it is no wonder that Hilton Worldwide is proactively cashing in on this new mid-market boom, with plans to double its presence in Dubai with eight mid-
market additions to its portfolio of hotels, including Hilton Garden Inn Bur Dubai, Hampton by Hilton Dubai Al Mina and Hilton Garden Inn Dubai Mall of the Emirates.
Discussing the brand DNA of Hilton’s budget and mid-scale hotels, Carlos Khneisser, vice president of development, Middle East says: “Hampton is a brand that started in the US about 30 years ago and we now have 2,050 hotels trading worldwide in 17 countries, and we are set to have our first Hampton hotel in this region. It will be the largest Hampton in the world with 420 rooms.
When you think about the Hilton family brands, Hampton is a point of entry from a price perspective, it is all about value and so we offer free breakfast, complimentary WiFi and so the product is typically at the lowest price point that we can reasonably achieve. When we think of a market like Dubai that is typically known for its 5-star hotels, we are on a quest to make Dubai more of a leisure destination for a wider audience of people. Not everyone has the financial capability to stay in a five-star hotel.”
Explaining why now is the right time to launch into the mid-market sector for Dubai, Andrew Clough, SVP of development, Asia Pacific and Middle East, Hilton Worldwide, explains: “There is business demand here and when you take a look at the business strategy that has been mapped out here for 2020, plus efforts made by Emirates airlines to convert connecting travellers into over night stays, there are genuine incentives in the region to encourage affordable brands like Garden Inn and Hampton by Hilton.
“We also see the great benefit in having these mid-scale properties, because we are able to boost and balance out our rates for our luxury properties as opposed to continually dropping our rates. We will have a clear distinction between our luxury brands, our budget and mid-scale brands.”
Touching upon the brand’s understanding of the Middle East, Clough continues: “If you stand back and take a look at Hilton, we have been in the Middle East for more than 50 years, so in terms of understanding source markets and new growth areas, having been here through the ups and downs we have created this great knowledge base and infrastructure in order to move ahead with aggressive plans to tap into new markets, such as mid-scale hotels.”
And defining the difference between Hilton’s mid-scale properties to others in the region Clough, adds: “Hampton is our largest brand, its growth rate is phenomenal and is really the category killer for other mid-scale hotels. We brought the Hampton brand out of North America in 2008. So each market that we have approached we started with a clear view of our Hilton DNA, but also a blank sheet in relation to making it fit the current market.
When you walk into a Hampton’s hotel anywhere in the world you know what you are getting, we reflect the brand’s DNA in every hotel worldwide and that is what makes our mid-market brands so successful. People trust us based on our consistency,” adds Khneisser.
And with eight mid-scale properties already in the pipeline, Khneisser adds: “We feel that now is definitely the right time to grow out mid-scale brands and Dubai has been the best place in the Middle East to start unveiling Hampton and Garden Inn properties, but we are looking into some leads in Saudi Arabia and Qatar. The moment that we launched the brand in Dubai we had plenty of interest from other locations in the MENA region.
“Saudi is a rich country with a lot of resources and internal tourism, the government is also spending a lot of money on the infrastructure, so secondary cities are growing, including Jizan and Jubail, which still lack hotels in industrial locations hence why Saudi Arabia is a key area for us.”
With Dubai renowned for its luxury sector Clough points out why mid-market hotels are making more sense than ever: “If you look at the way hospitality markets evolve and in the more formative stages of the cycle you see luxury and upscale hotels rapidly develop, but then as markets mature even further that is when the segmentation really comes in.
When considering Dubai, it is already way past the tipping point where mid-market hotel developments make compelling sense. The market already has a phenomenal array of luxury hotels and you will still see the development of that space grow but it now makes sense to build up that middle to encourage growth in tourist numbers.”
“With the 10% municipality fee waiver the government here is incentivising investors to build these three and four-star-hotels and this has also helped fuel the appetite for such brands. In addition to this, budget and mid-market hotels are attracting a totally different segment, and in peak season, room rates in Dubai are extremely high, isolating guests that are budget conscious and so mid-scale brands will encourage them to visit, we want to be their preferential choice,” adds Khneisser.
Hilton Garden Inn Bur Dubai
- 292 guest rooms
- Located in a prime area of Dubai Creek
- Walking distance from Souk Al Kabeer
- Two food and beverage outlets
- A large multi-functional meeting room
- 24-hour business center and Pavilion Pantry
- A swimming pool and health club
Hampton by Hilton Dubai Al Mina
- Located near Dubai International Airport
- 206 guest rooms
- Breakfast area
- A bar and gathering zone
- Gym and swimming pool