Hoteliers, Investors Debate Viability of New Hotel Development in Middle East
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As hotel markets in the Middle East continue to mature, hoteliers and investors argue the key consideration in whether to develop in the region should be the profitability of existing hotels — not necessarily the current supply and not predictions for occupancy.
RAS AL KHAIMAH, UNITED ARAB EMIRATES - As hotel markets in the Middle East continue to mature, hoteliers and investors argue the key consideration in whether to develop in the region should be the profitability of existing hotels — not necessarily the current supply and not predictions for occupancy.
At a Gulf & Indian Ocean Hotel Investors’ Summit focused on hotel development, the four participating panelists were divided evenly on whether there is still room to build new hotels in the Middle East.
Ahmed Elbassyouni, head of hospitality at Al Ghurair Properties, said with another 40,000 hotel rooms due to open in Dubai in the next three to four years, yields are declining, and assets are being devalued year after year.
“Some areas of Dubai, if not all, are oversaturated. In midscale in 2018, average daily rate was $65, and now it is $59. The question is, will that rate drop to $40?” he said.
“There should be regulations on new-builds. They need to fit into the city in a long-term play,” he added.