MIDMARKET AND BUDGET OPTIONS, LAURENT VOIVENEL, CEO, HOSPITALITY MANAGEMENT HOLDINGS (HMH), TALKS ABOUT THE HOTEL SECTOR’S FUTURE PATH.
TRAVEL TRADE WEEKLY: HMH’s UAE portfolio includes four properties; two in Dubai, one in Sharjah and one in Ajman. How have these hotels performed year to date?
LAURENT VOIVENEL: The performance of all our hotels in the UAE has been in line with the market conditions – be it in Dubai, Sharjah or Ajman.
While the latest financial results for our properties have been superb in Sharjah and Ajman, hotels in Dubai have been a little subdued compared to previous years and this is mainly due to various factors impacting the tourism industry, not only regionally but globally.
The unexpected drop in oil prices and the weakening of the Euro have adversely impacted tourist numbers as has the oversupply in hotel sector with new supply coming on stream.
Despite challenging market conditions, recording the highest occupancy, average daily rates (ADR) and RevPAR, Coral Beach Resort Sharjah was the best performing hotel in the city during this Eid Al Adha. […]
TRAVEL TRADE WEEKLY: With a large number of hotel developments underway in Dubai, how do you see the emirate’s hotel sector evolving over the coming years?
LAURENT VOIVENEL: The scale of opportunity in the region for midmarket and budget hotels is unprecedented.
Expanding airline network – especially low-cost carriers, increased airport capacity, a growing middle class, emerging source markets, addition of new tourism and family attractions and enhancement of infrastructure are all fuelling the demand for mid-market hotels. Being in Dubai, we are all living the excitement, the dream.
Planning and construction is heavily underway with enormous new supply preparations.
The Dubai Department of Tourism & Commerce Marketing (DTCM) estimates the need for 160,000 new rooms by 2020. Multibillion dollar worth of projects are being rolled out.
All these new developments are reinvigorating and reshaping the hotel sector.
We all know there is a near saturation in the market when it comes to luxury hotels. The market does not need any more luxury hotels at this point.
Oversupply of rooms in this segment is putting a tremendous pressure on rates that in turn is affecting return on investment (ROI).
However, the same is not the case with midmarket hotels. Given the demand, investors can expect double digit ROI between 10 to 12 percent every year with the right product and the right location.
Therefore, every single operator is looking at how they can attract the future market, meaning the market of tomorrow [that being] the middle class.
This is why at HMH, we have three brands out of five targeting the middle class because the middle class that today represents 2.5 billion will, by 2025, represent five billion around the world.
ECOS Hotels is a no-frills bed and breakfast brand that ties together a unique economical and ecological concept. It is a smart choice for investors offering strong investment opportunity because of lower construction and operating costs and quick and high return on investment. Our aim is to launch the first ECOS in Dubai.
TRAVEL TRADE WEEKLY: Which are the next hotels to open under the company’s umbrella?
LAURENT VOIVENEL: Development is a key focus for us and we have got some very exciting projects under consideration that are at various stages of negotiation.
We definitely want to capitalise on the opportunity presented by Expo 2020 and 2022 FIFA World Cup in Qatar.
However, we wish to grow the path according to our strategic plan that is sustainable in a physical sense. It is not only about business opportunities out there, rather our strategy is to drive value over volume.
The GCC, particularly the UAE and Saudi Arabia, is central to our growth. By 2020, our goal is to have a hotel in every GCC country while doubling our portfolio in the UAE, and to achieve it we have set in motion a strong pipeline of
TRAVEL TRADE WEEKLY: Halal-friendly hospitality has long been a hallmark of HMH. What are your plans in this regard?
LAURENT VOIVENEL: HMH is a key player in the Halal-friendly segment in the Middle East and is the region’s largest group to operate in the dry segment. Being a pioneer in establishing the region’s first alcohol-free chain of hotels, it continues to be the only one to follow Halal-friendly policy across all its brands.
At HMH, we are uniquely positioned to capitalise on the Halal segment, having been successful in penetrating it early. Over the years, we have gathered an amazing experience both in terms of operations and market intelligence in the dry hotel segment which is one of our key strengths.
Halal-friendly policy is part of the company’s culture and DNA and not simply a business decision.
Unlike other companies whose aim is to have a share of the pie by creating stand-alone dry brands or hotels, all brands under HMH are Halal-friendly no matter where we operate. Our primary objective is to offer our customers, be it corporate or leisure travellers, a safe and healthy environment.