Gallery Suites Vacation Rentals LLC, a subsidiary of the UAE-based IBC Group, today announced that it has joined hands with OYO Rooms for a deal valued at US $5 billion (AED 18 billion) to furnish & manage 10,000 premier holiday homes in Dubai. The largest hospitality company in Asia and the third largest in the world, OYO was recently backed by AirBnB with a buy-in of nearly $200 million, which follows a monumental $800 million funding round lead by Masayoshi Son’s $100 billion dollar Vision Fund, in 2018. The partnership will manage a portfolio of 10,000 elite properties in Dubai, as premier and uniquely furnished holiday homes that address a growing demand for exceptional short-term rental experiences, in the Emirati City.
According to a report released by Skift Research, the cumulative bookings market for short-term rentals will rise to an estimated $115 billion in 2019, up 7% from about $107 billion in 2018. Gallery Suites and OYO Rooms seek to emerge as the service providers of choice for the exclusive end of this burgeoning market in Dubai. The properties being furnished and managed by the partnership are focused within locations rated ‘high’ in the ‘occupancy heat map’ used to illustrate demand, in the recent ‘Dubai Holiday Homes Market Review 2019’ report released by Knight Frank – including the Dubai Marina, Palm Jumeirah and other exclusive addresses in the city.
Envisioned as offerings that will appeal to a growing segment of discerning international travellers who appreciate the finer things in life, the properties will feature exquisite artifacts and art installations, to stimulate the mind and stir the soul. Gallery Suites aims to create inspirational living spaces that deliver a tasteful, elegant and classic ambience and experience, at some of the most sought after locations in Dubai. The partnership will be further bolstered by the exceptional marketing and revenue management acumen that has seen OYO Rooms emerge as one of the hospitality sector’s most outstanding performers globally.
The alliance between the two heavyweights comes at an opportune time. Globally, travellers are increasingly seeking out the ‘home away from home’ experience that short-term leasing offers, while aspiring to affordable luxury. Additionally, the upcoming Expo 2020 event is expected to attract 25 million visitors from all across the world to Dubai. A significant section of these arrivals will be cosmopolitan and sophisticated travellers who value refined and cultivated experiences. The partnership aims to offer a rich pool of high-quality holiday homes, in high-price locations, at affordable rates, to the international travelers visiting Dubai.
A complementary partnership
Gallery Suites Vacation Rentals LLC is part of the highly regarded IBC Group, which is backed by global banking and finance leader Khurram Shroff, who was featured in the prestigious list of the “Top 100 Most Powerful and Influential Muslims in Great Britain and the World” by Power100. The company will bring its comprehensive understanding of the select and exclusive segment of the Dubai short term rental market to the table. As part of the deal announced today, the IBC Group will retain ownership of the properties, leasing them to Gallery Suites to furnish and operate under permits issued to it. In turn, OYO Rooms will enable many of the fundamental operational functions – such as marketing, housekeeping and check-in/check-out facilities.
Since its meteoric rise in the hospitality world, OYO Rooms has grown to have a presence across 82 countries and has secured the backing of SoftBank, LIGHTSPEED Venture Partners, SEQUOIA, Hero, GREENOAKS, and HUAZHU Hotel Group Limited. Having recently launched Arabic language support on its app platform, the company is actively seeking to court the local customer base and extend its reputation for providing convenient, reliable and comprehensive services into the region.
Competitors turn partners: A growing market that is primed for visionary intervention
In 2010, the five largest short-term rental companies were responsible for a mere 4% of bookings in the global short-term rental. In less than a decade, these five leaders will be responsible for an estimated 73% of such arrangements by the end of 2019. The Dubai Holiday Homes market is primed to replicate this success and Gallery Suites and OYO Rooms seek to build a unique brand profile to serve this growing niche.
On how this growth can be contextualized within Dubai’s holiday home market, Khurram Shroff quoted insights from a recent Knight Frank report. “Dubai’s holiday home market accounts for 2.0% of Dubai’s total households, which is the highest proportion of all other key global hub cities. Active short-term rentals currently listed in the city number 10,766, which represents growth exceeding 160%, since 2016,” said Shroff.
This optimism about the anticipated growth of the short-term accommodation market in Dubai is shared by the management team of OYO Rooms as well.
According to Pranav Mehta, the Country Head for UAE & Oman, OYO Arabia, the venture is an opportunity for OYO and Gallery Suites to leverage their strengths together, as opposed to competing for the same marketshare. “We at OYO UAE are keen to expand our engagement with the Dubai market and grow along with the IBC Group through the course of this project. The unique approach that The IBC Group and Gallery Suites are taking in selecting prime hot locations, and in furnishing this portfolio of properties, as well as the scale of the venture, represents an exciting possibility for collaboration between our two companies”, Pranav added.
The venture will see the two competitors, Gallery Suites and Oyo rooms, turn partners in an attempt to leverage their individual strengths and deliver a cutting-edge product to the market.