Issue 1 - January 2015
The Emirates Academy Hospitality Quarterly
Welcome Message from The Dean
In This Issue Welcome message from the Dean Growth of the Lifestyle Hotel in Dubai Mega Project Announcements In Focus: Tourism and Hospitality Growth in the UAE Economic Outlook Theme Park Expansion in Dubai In Bound Markets: Russian Downturn Millennial Trends Consumer Trends in 2015
Welcome to this ďŹ rst edi on of the Emirates Academy Hospitality Quarterly. The publica on is intended to provide a quarterly snapshot of research, trends and sta s cs poten ally impac ng on the hospitality industry in Dubai and the wider GCC. Through the provision of regular updates we intend to inform decision makers in industry, academics and students about key trends and contemporary developments in the region. This ďŹ rst edi on has a special focus on lifestyle hotels and theme Dr Stuart Jauncey, Dean EAHM parks, two areas of development that will have a profound impact on the nature and scale of regional tourism. The Emirates Academy of Hospitality Management is the leading regional provider of interna onally accredited Business Educa on with a clear focus on the Hospitality Industry. Formed in 2001 we now have graduates working in senior posi ons across the global industry and we have developed signiďŹ cant research capacity through our highly qualiďŹ ed faculty. For further informa on about our university do look at our website or contact me directly by e-mail: stuart.jauncey@emiratesacademy.edu Growth of The Lifestyle Hotel in Dubai, with its established reputa on for Dubai luxury, already has a number of hotels in Lifestyle brands have become a global the lifestyle category with the likes of phenomenon with many of the major Armani, Alo: and Vida and it can be hotel chains all inves ng in developing expected that in amongst the 44 new their brand por2olios to create new brands entering Dubai between now and concepts aimed at the increasingly 2020 that several of these will be lifestyle oriented. New players in 2015 include W by Starwood, Versace and Manzil by Emaar, with Bulgari and the recently announced Venu by Jumeirah in the pipeline. However, as the compe on increases and the hotel industry diversiďŹ es on the run up to EXPO2020 the Source: www.openbuildings.com crea on of a lifestyle brand may not discerning and experience driven mean that a hotel will automa cally consumer. Most recently Hilton has a6ract customers. Hotels in the region launched ‘Canopy’ , Hya6 has ‘Andaz’, will need to focus on combining unique IHG has launched ‘EVEN’ and Marrio6 has hotel proper es with well trained and ‘Edi on’. These lifestyle brands aim to conscien ous sta if they are to create a enhance the guest stay via the provision truly individualis c and unique experience of items such as healthier menus, that will keep the customer coming back. environmentally friendly alterna ves and the promise of a unique hotel experience.
Mega Project Announcements â—Š USD 32bn is to be invested in the Al Maktoum International Airport for further expansion, allowing the airport to handle over 200mn passengers in approximately 10 years time. The project will take 6-8 years to complete.
â—Š With the EXPO set to run from October 2020 to April 2021, Meraas Holding has released a plan to build three theme parks near the EXPO site. See the feature on theme parks in this issue.
â—Š Emaar
Properties and Dubai Holding have launched their plans to jointly develop the Dubai Creek Harbour at the Lagoons. This mega urban district spanning 6.5 million square metres will house 3,664 office units, eight million square feet of retail space, 39,000 residential units and 22 hotels with 4,400 rooms. Located along the Dubai Creek next to the Ras al Khor area, the development will also feature the “Dubai Twin Towers� which are planned to be the tallest in the world.
IN FOCUS: Tourism and accommoda ng a number of new hotel Hospitality Growth in the UAE categories; a focus on wellness and medical tourism as a move away from the The announcement in November 2013 tradi onal leisure market; and the launch that Dubai had been selected to host the of a number of new visitor a6rac ons EXPO2020 has provided an immediate including the Dubai Mall of the World and boost to the economy of the UAE and the announcement of several new theme improved the global image of the parks. des na on. When combined with the UAE’s na onal tourism strategy of increasing interna onal and domes c tourists and the regions reputa on for poli cal stability 2014 has been a successful year overall. This has subsequently fueled growth in a number of new tourism and hospitality related projects and while the majority of these are located in Dubai and Abu Dhabi, the growth of the industry can also be seen in the other Emirates with new projects Despite a cau ous start to the year in light announced in Sharjah and Ajman. of changes in the global economy and the The tourism and hospitality landscape saw recent fall in the inbound Russian market a number of important changes in 2014 for January the outlook for tourism and including the development of a much hospitality in 2015 is s ll posi ve with BMI more diversiďŹ ed hotel sector which an cipa ng further increases in tourist includes a drive for more mid-range hotels arrivals and receipts which are well above and a signiďŹ cant increase in lifestyle the World Tourist Organisa on’s global concepts; the crea on of a new DTCM average of 4% growth. hotel classiďŹ ca on scheme aimed at
Economic Outlook STR’s Report on Hotel Industry Performance in the Middle East in December 2014 showed an increase in RevPAR, ADR and Occupancy rates across the region compared with the same period in 2013. For the UAE Occupancy rates were up 0.1% to 77.1, ADR was up 2.6% and RevPAR up 2.7%.
Dubai is the leading city in the region again, con nuing to see above average occupancy rates over the course of the year. While there has a been a slight dip of 1.5% in occupancy for December caused by the slump in the Russian market, this is slightly compensated by increases in ADR, up 2.4% on the same period in 2013 and RevPAR up 2.7%.
Abu Dhabi con nues to demonstrate strong growth with ďŹ gures for December showing an increase in Occupancy of 9.8%, ADR up 9.7% and RevPAR up 20.5% on the same period in 2013.
As we enter 2015 the industry outlook is one of cau ous op mism with Dubai forecast to be one of the strongest ci es in terms of revenue growth in the UAE this year.
Theme Park Expansion in Dubai In its ongoing bid to maintain its a6rac veness and diversify its appeal as an interna onal tourism des na on Dubai has embarked on a wave of new investments in theme parks and theme hotels.
Mega Project Announcements â—Š Damac Source: www.gulOusiness.com
IMG’s Worlds of Adventure, a 1.5 An Ar st’s Interpreta on of Mo ongate Theme Park million square feet indoor had worries about DPR’s performance as a entertainment des na on worth USD result of falling oil prices. The worries held 1billion, is nearing comple on. In 2014, through as DPR disappointed investors H.H. Sheikh Mohammed Bin Rashid Al with a 9% slump in share value on the ďŹ rst Maktoum approved AED 10 billion day of trading. Irrespec ve of the towards the development of ďŹ ve new lackluster performance, 35% of the theme parks in Jebel Ali to be headed by infrastructure work and 45% of u lity Dubai Parks and Resorts (DPR), a services were already complete on the subsidiary of Meraas. DPR launched the project at the end of November 2014. ďŹ rst stage of the development consis ng Furthermore, Paul La France Chief of three of the ďŹ ve theme parks, Projects OďŹƒcer for the development, Mo ongate Dubai, featuring rides and conďŹ rmed that the project was on budget. a6rac ons based on the DreamWorks The park complex is expected to be anima on movies, Bollywood Parks Dubai, completed by 2016 and is an cipa ng focusing on the Bollywood Industry, and welcoming 6.7 million visitors in its ďŹ rst Legoland Dubai, the ďŹ rst park of its kind in full year of opera on during 2017. the region. Addi onally, the development Although DPR had a shaky start, theme will feature leisure facili es and a family park developments can mean big business oriented hotel. At the end of last year DPR for hotels built in and around their announced an IPO on the Dubai Financial loca on. Colliers Interna onal Reports Market (DFM) intended to help ďŹ nance that the global average length of stay in a the mega project. The IPO was welcomed theme park hotel is 3 nights with innerand supported with talks of conďŹ dence in circle theme park hotels showing up to the company’s performance on the DFM. 10% higher occupancy rates compared to However, the day before the IPO investors outer hotels. Theme park hotels also require more food and beverage outlets than non-themed hotels crea ng more jobs and more B2B business arrangements. When opera onal, the theme park projects in Dubai will provide another unique oering for the 20 million Source: www.imgwoa.ae tourists Dubai hopes to a6ract annually by Model of IMG World of Adventure 2020.
Properties has announced the launch of Akoya Oxygen a golfcentered mega project in Dubailand. The 55 million square feet project will include residential areas, luxury retail, hospitality and wellness areas, and a golf course designed by Tiger Woods.
â—Š Investment Corporation of Dubai released their plans to build the AED 5.14 billion Royal Atlantis Resort and Residences. The 46 storey development next to the existing Atlantis, on The Palm will host 800 hotel rooms, 250 luxury apartments, and a sky pool 90 meters above the ground.
â—Š Dubai
Holding’s has announced the AED 25 billion Mall of the World complex set to break ground early this year. Located on Sheik Zayed Road the complex will cover a total area of 48 million square feet and will include 100 hotels (20,000 rooms). The first phase of the project is expected to be complete in by 2018.
Inbound Markets: Russian Downturn Dubai hotels and tour operators are currently feeling the knock on eect of the falling value of the ruble and a slump in oil prices. Demand from the Russian market is nearly 50% down on the same period last year while DXB saw an 8.2% y-o-y decline in passengers from Russia and CIS countries in October 2014. The Russian market, with over 400,000 visitors last year, is Dubai’s ďŹ :h largest source market. The real impact of the slump in visitors will only truly be seen in the coming months as the majority of Russian tourists come to Dubai during the winter season to a6end the Dubai Shopping Fes val and as they take me o for Orthodox Christmas and New Year. In 2013, Russians were amongst
the highest spenders in Dubai according to VISA with more than USD 82 million charged to credit cards in 2014, up from USD 61.3 million the year before. Reports however show that it is the middle and upper-middle income segments that are most aected while companies working with charter ights and larger tour operators have seen sales decline by 30% or more. The high-end travelers however are s ll keen to book lavish hotels with average spend at USD 30,000 per booking. Despite ďŹ nancial concerns, the Dubai government is s ll inves ng heavily in their Russian marke ng eorts and views the country as “a key source market for the long termâ€?.
Millennial Trends on fair-trade and responsibly Described as indecisive and selfmanufactured items. promo ng, millennials (those people aged 12—32) now add up to 2.6 billion people â—Š Millennials in general have less cash to globally. Recent trends released by spend and are reluctant to spend what Euromonitor indicate that this group they do have. cannot be ignored, either as poten al customers, or as poten al employees and â—Š In the US a third of 18-34 year olds s ll live with their parents. Higher youth is likely present the hospitality industry unemployment and massive student with a number of challenges. These debt means millennials are o:en trends include the following: delaying major milestones. Tradi onal â—Š Millennials are increasingly concerned purchases for the home or children are about their digital privacy and are more subsequently declining and companies aware of their digital footprint. They are now need to market to and approach careful about what informa on is millennials on their own terms. released to their parents, to their â—Š As the most diverse and educated employers, and to their colleagues. genera on ever, millennials in the â—Š The segment is considered to be ‘savvy’ workplace are also showing speciďŹ c when shopping, risk-averse, and socially characteris cs. They are great at team conscious. They expect companies to work and have a “can-doâ€? aUtude, but launch responsible and impac2ul they also feel en tled to constant programmes to meet their high online access, a life away from work, standards. They make fewer purchases and always expect variety in their job of cars and homes, but rely heavily on role. technology to ďŹ nd them the best prices
Consumer Trends in 2015 â—Š Consumers
want their purchasing experience to be as convenient as possible. Time is a valuable resource for the modern consumer and they are more willing to buy products that optimize the use of this resource.
◊ As always, being “green� is a trend that is still in fashion, however 2015 will reveal that consumers also look for companies who consider woman’s rights issues as well as mixing in designs centered on morality and politics.
â—Š Shopping as a main activity while travelling will be on the rise this year. This is especially true for Chinese travelers, with reports showing that 27% of Chinese tourists abroad spend more on shopping than on anything else.
â—Š Offering online privacy is a key selling point that appeals to consumers. Using a strategy that is privacy friendly can be a winning technique in 2015.
â—Š The
millennial generation continues to shape both company and consumer relationships. See the feature on millennial trends for more details.
Editor: Editor Angela Anthonisz, Senior Lecturer Research Associate: Associate Conrad Sokolnicki