The recent arrival of The Edition Abu Dhabi Hotel and the much-anticipated Mama Shelter hotel in Business Bay seem to herald the boutique concept in the UAE. David Lessard, however, remains sceptical about it. He says: "While The Edition Abu Dhabi is a Marriott brand, Mama Shelter is now part of the Accor portfolio. They are large hotels with a boutique mask, but are pulling it off quite well."
Lessard opines that independent boutique hotels will remain a rarity in Dubai for the forseeable future. He says: "In such a crowded market that has a high price of entry, I am not sure we will see too many in the next five years. Hotels that are 120-keys or less in places like the UAE become unfeasible in terms of return on investment targets. These properties typically rely on a supplementary stream of revenue, as this is the case for many independent, family-owned boutique hotels. I know this sounds absurd, but boutique hotels are often passion projects with slim returns on investment – usually as one component of a larger portfolio and usually with long pay back periods. This model is not conducive to Dubai real estate investors."
The New York native also shares that another factor in this equation is that owners still rely on the large international brand recognition – not only as a safe pair of hands to operate, but also with a wide marketing reach. "Hotels in the region are mostly commercial opportunities, and not necessarily emotional opportunities, and there is a higher probability of returns with a major hotel operator in a property of 180-keys or more, " he says.
Read the full interview in the February 2019 edition of Commercial Interior Design.