Recent reports have estimated that about 140,000 hotel rooms and serviced apartments are needed to meet the expected rise of tourist footfall for Expo 2020, which means that from now until then, architects, consultants and contractors will need to work together to build 10,000 units per year.
And because tourism traffic is expected to continue to rise until 2030, which will see 25 million visitors, Dubai is looking to cater to a new kind of tourist – one that isn’t interested in (or can afford) the five-star luxury resort. The various conditions of the market and its direction are pressuring industry insiders to begin providing more options.
According to Emad Jaber, managing partner of architecture and engineering firm La Casa, in response to the emerging conundrum, clients are now opting for serviced apartment complexes rather than hotels, so as to benefit from their multiuse.
“There’s a huge demand for serviced apartments for two reasons,” he said. “First, it’s like a second home in Dubai – the owner can use the apartment whenever they visit and when they’re not there, they can rent it out. Secondly, with speculation of the market’s direction, investors find it to be a safe option. In the short term, even if the market goes down, you can still sell it and get six or seven percent return.”
The hospitality market is still seeing a sharp rise in hotel construction, though, and as Jaber points out, this sector is expanding and starting to offer quality three and four-star hospitality options – something that can also be seen in neighbouring GCC countries like Saudi Arabia and Qatar.
Diversifying the market has led to a sharp growth in cost-effective building, too, which sees a reduction of room size, operational services and amenity features. Without compromising on the quality of build finishes, the smaller rooms and fewer staff make a large difference on the cost of maintaining the building.
“The operational costs of a five-star hotel reach 55 percent of the revenue of the hotel – it’s that high,” said Jaber. “You’re talking about five people per room to provide 24-hour service. So if you have 600 rooms, you’ll need 3,000 staff. But in serviced apartments or three-star hotels, you can opt for all-day, self-serve dining, a minimal health club and a simple, but elegant lobby.”
He added: “All you need is a decent room, a clean bathroom and proper lighting. As a guest, you probably don’t want to sleep, meet and dine in your hotel, you want to get out and explore the city. This is the vision of his highness for Dubai.”