Budget hotels see opportunity in Dubai market (page 2 of 2)

'By establishing our limited service brand Holiday Inn Express in the region, we are meeting that need, catering to travellers looking for comfort and convenience at a great price,' he said.

IHG opened its first Holiday Inn Express in the region at Dubai Media City in July 2007, and the property has exceeded expectations, Bamsey claims. Since then IHG has opened Holiday Inn Express Safa Park and Holiday Inn Express Jumeirah, and plans to open Holiday Inn Express Dubai Airport this summer.

Competition increases

One manager of a three-star property in Dubai says he has seen a significant rise in the number of budget properties in the emirate since his hotel opened three years ago. 'There have been at least half a dozen mid-market direct competitors from the international chains along with other independent hotels,' says Mark Lee, General Manager of Arabian Park Hotel.

Dubai has recognized that its hotel offerings are weighted to the high end, Lee noted, and he believes there is 'no doubt' that there will be an ever-increasing amount of mid-market hotels opening up in the coming years in line with the emirate's ambitious expansion plans.

However, success for these new hotels will not come easily due to increased competition and the fallout from the financial crisis. 'There is no doubt that business levels have dropped year-on-year due to the current situation.

'We are using this to review all aspects of our business and we are working even harder in terms of sales marketing yield management value for money in order to ensure that we weather the storm better than our competitors,' Lee said.

Geographic location will become increasingly important in this challenging environment, and hotels with a prime location will still be able to be more price resistant. 'However, the trouble with Dubai is you could be in a fantastic location now but maybe in three years time maybe you might not be because its infrastructure changes so much,' Lee noted.

Lee said his hotel has had to be more creative and think even more outside the box in the current financial climate. To help lure guests, Arabian Park Hotel is offering a special during the Dubai Shopping Festival in which guests will receive a one hundred dirham voucher for every night they stay at the hotel to spend at over a dozen restaurants at nearby Wafi.

'Dubai has been riding a crest of a wave for the last 5-6 years and had it relatively easy, but now we have to roll up our sleeves and work harder to win the business. Yes it's very challenging but not necessarily a complete disaster because it makes us all better, which ultimately should help Dubai in the long run,' Lee said.