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Budget hotels have ‘seven-star’ potential

Budget hotels have ‘seven-star’ potential

In the pre-recession days of ‘bling’ developments like Dubai’s Burj Al Arab, Mideast hotel owners weren’t interested in developing mid-market properties. But they are now.

May 7, 2010 9:33 by

The groundbreaking of a new hotel in the UAE last month could have been mistaken for yet another overly optimistic play for the region’s high-end luxury market.

Instead, the groundbreaking was for Premier Inn, a chain that describes itself as “value for money,” and which uses a logo featuring a crescent moon doing what most people actually do in hotels – sleeping.

The managing director for the company in the Middle East, Darroch Crawford, says the chain will continue to expand in the region despite the economic slowdown. “For Premier Inn it is vital for us to take advantage of the increasing number of travelers seeking out the best value.” Premier Inn recently signed a deal with Emirates, an airline which has always emphasized luxury. But an executive vice president at Emirates acknowledges there is an unmet need in the region. “I think Dubai needs more mid-market hotels,” says Ali Mubarak Al Soori. “That market is growing. It wasn’t there before.”

A report from CB Richard Ellis indicates that building a mid-market hotel may have been a good move. “The continuing development of five-star deluxe hotels within the Emirate will place pressure on occupancy levels and thus the ability for hotels to charge high rates with many offering significant discounts,” it says.

Prices in the four- and five-star markets fell in 2009, and the CEO of Rezidor, which operates the Radisson Blu and Park Inn hotels in the Middle East, Kurt Ritter, says he expects them to stay at their current levels for another year. “I think prices will not increase with the availability of rooms,” he says. He advocates less growth and more control in the market.

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