Budget hotels seek to tap UAE corporate travel market (page 1 of 2)

Over the past decade, the UAE positioned itself as a luxury destination with the launch of some of the most expensive hotels in the world. In 2008, the average daily room rate in Dubai was an eye-popping $308.51, due partly to the fact that hotel supply in the emirate was relatively small and low-cost accommodation was scarce.

However, in the past year a number of budget hotels have entered the country looking to address this gap in the market. These hotels are looking to attract large numbers of business travellers, as many companies have instructed their employees to trade down from five-star hotels when taking business trips.

Rotana launches Centro

Leading the charge into the budget segment is Rotana, which currently manages 70 hotels across the Middle East and North Africa. The Abu Dhabi-based firm plans to open 25 budget hotels in the region under the banner of its new Centro brand.

Centro hotels will aim to attract young executives who cannot afford to spend 200-300 euros a night for a room but do not want to compromise on quality of service and comfort, says Philippe Anric, General Manager of Centro Yas Island - Abu Dhabi.

The Centro brand did not arise out of the financial crisis, Anric said, pointing out that planning for this new hotel segment began over five years ago. 'But when the economic tsunami hit, the first action for many companies was to look at travel expenses. We said, look we have a solution for you, Centro,' he explained.

Rotana's first Centro opened in October, 2009 on Yas Island, and the company added a second in the Al Barsha area of Dubai earlier this year. Three more are under construction in the UAE, and a total of 25 are under contract in the region.

The rates vary slightly, depending on location, with the average being about 400 dirhams. Currently, about 70% of guests at Centro Yas Island are business travellers. 'This is the situation in 2010, but we are expecting this business mix to change in 2011, as Yas Island matures and more entertainment options come online on the island,' he noted.

Premier Inn eyes growth

Premier Inn, the UK's largest budget hotel brand, also is expanding rapidly in the Middle East with a view towards attracting business travellers. The company, which has opened three hotels in Dubai, aims to be represented in every major city in the GCC within the next five years.

Premier Inn is hoping to make the most of the potential opportunities that the downturn is offering. 'I don't think the downturn has been good for anybody, because the market has gotten smaller, but it has meant that a much higher percentage of corporate travellers are price conscious, so people are looking for value,' says Darroch Crawford, Managing Director of Premier Inn in the Middle East. 'So it has introduced some new corporate customers to us that we may well have not attracted had it not been for that situation.'

The company plans to open a hotel in Abu Dhabi next year, and has announced a new project in Doha and two more in Saudi Arabia. Business travellers represent a major portion of Premier Inn's guests, and they are major part of its strategy moving forward.

'In our three Dubai hotels, two of them have 80% business travellers, compared to 20% leisure. Even at our hotel near the airport, where the mix is closer to 50-50, the business travel segment is important because they tend to stay longer,' he noted.