Midscale in Dubai? Local developer says yes

Dubai-based developer Nakheel Hospitality and Leisure sees a large tourism influx heading for the area – which means a larger investment in midscale opportunities. The local developer is in the process of developing Deira Islands, a massive 50,000-square-foot waterfront city aimed at leisure travellers set to open in 2020. It’s also moving to invest in midscale like DoubleTree and Premier Inn. 

HOTELS spoke with Nakheel Managing Director Thorsten Ries about the company’s forward looking development plans.

HOTELS: What are Nakheel’s larger pipeline plans for the UAE?

Thorsten Ries: While residential development remains our core business, we continue to diversify our project portfolio, with hospitality a key focus. Our US$1.3 billion hospitality investment will deliver 17 hotels, resorts and serviced apartment complexes, with 6,000 rooms and hotel apartments between them, across Dubai in line with the Government of Dubai’s tourism vision. Our first two hotels opened in 2016; the rest are at various stages of construction and development.

H: Where is the company in its cycle? How is Nakheel feeling about growth right now in terms of further development compared to five years ago?

TR: Dubai’s tourism sector is growing year-on-year. Five years ago, Dubai welcomed 11 million tourists (2012 statistics from Dubai Tourism), and this figure has risen annually to 14.9 million visitors in 2016 and is expected to reach 15.4 million in 2017. The Dubai Government is targeting 20 million tourists a year by 2020. Nakheel is playing a key role in meeting this target. We are master developing Deira Islands, a new, 15.3 square kilometer waterfront city. More than 40 hotel plots have already been sold to investors keen to become part of Dubai’s growing hospitality and tourism scene. We have signed joint venture agreements with Spain’s RIU Hotels & Resorts for Dubai’s first all-inclusive beachfront resort offering: an 800-room resort and waterpark aimed at families. We also have a joint venture with Thailand’s Centara Hotels & Resorts for a 600-room seaside resort, also at Deira Islands, and a growing collection of hotels and serviced apartment complexes across the rest of Dubai.

H: Where’s the focus for the company lately? Middle market? Luxury?

TR: Dubai has traditionally been known for its high-end, luxury hotels and resorts, and while this segment continues to grow, it is now being complemented by a wider range of accommodation including mid-scale and economy-style hotels. Nakheel’s 17 hotels cover the whole spectrum. For example, we have partnered with AccorHotels’ Raffles and Marriott’s St. Regis – for two hotels on Palm Jumeirah. Our mid-scale offering includes the likes of Hilton’s DoubleTree brand, Minor Hotels’ AVANI, AccorHotels’ Ibis Styles and Whitbread’s Premier Inn. On the economy side, we just signed a management agreement with AccorHotels to operate a hotel under its ibis brand.

H: How concerned are you about oversupply? And in terms of brand escalation: is the UAE becoming oversaturated?

TR: Dubai is home to the world’s busiest airport, with some 80 million passengers a year. The emirate’s population is expected to climb from 2.9 million today to 5 million by 2030 and under the government’s vision the number of tourists is set to rise to 20 million a year by 2020. Dubai is also the host city for Expo 2020, which in itself is expecting to attract 20 million people. As the city continues to grow, so does the need for more accommodation, including hotels, resorts and serviced apartments for residents, tourists and businesspeople who chose to live in, visit or work in Dubai.

What’s surprised you in 2017? What are you forecasting for 2018 in terms of development opportunities?

TR: We knew that our first two hotels to become operational – the Ibis Styles Dragon Mart and the Premier Inn Ibn Battuta Mall – would both quickly establish themselves as firm favorites for mid-scale accommodation. But we’ve been completely overwhelmed by the sheer success of the Premier Inn, which has exceeded all expectations. Since opening in October 2016, the hotel has gone from strength to strength, enjoying close to 90% occupancy from the start and, in November last year was crowned 3-star Hotel of the Year at the 2017 Middle East Hospitality Excellence Awards. 2018 will be a year of further delivery and diversification for Nakheel Hospitality, with more developments and announcements on the way. We will also continue to seek new partners in order to continue to bring new hospitality concepts to Dubai.

NAKHEEL HOSPITALITY PROJECTS