Airbnb or hotel room? Choose your pick

dubai - Dubai offers a variety of accommodation options for the short-stay traveller

The popularity of Airbnb as a short-stay accommodation option has been rising steadily in Dubai. This is after the Department of Tourism and Commerce Marketing (DTCM) allowed individual homeowners to secure licences for short-term rentals without having to commission a third-party entity in April 2016. The significant growth in supply of holiday homes is a reflection of increasing demand for alternative accommodation such as Airbnb.

"There are now more than 6,200 homes listed on Airbnb. Travellers to Dubai will be able to book a home in any neighbourhood, at any price point to find the one that will make their stay unique. Additionally, we have launched Experiences in Dubai so guests can not only book where they stay on Airbnb.com but also find local things to do like a desert safari, a street food tour, a hands-on ceramics experience or architecture photography. Hosts do not need to pay an additional fees to the DTCM," says Hadi Moussa, head of EMEA partnerships at Airbnb.

The DTCM has recognised the need to provide rooms at all price points to accommodate the spike in visitors expected for Expo 2020. This includes timeshare and temporary lodgings (such as Airbnb) and these sectors of the market are expected to open up further.

In fact, even Abu Dhabi's tourism authority is preparing to legalise Airbnb imminently. Earlier this year, Ras Al Khaimah's Tourism Development Agency signed a memorandum of understanding with Airbnb to promote new rules and responsible home sharing.
"Airbnb is a popular option for travellers, especially for larger families who would ordinarily have to go for 2 or more rooms within a hotel. Thus, Airbnb is not only a cheaper option but also a more flexible way of spending your holiday within the environment of a 'home'," observes Mario Volpi, sales and leasing manager, Engel & Volkers.

Airbnb accommodation may also appeal to millennial travellers looking for exceptional local/social experiences; or the so-called FITs (free independent travellers) who tend to be cost-conscious, explains Dale Qi Shen, associate director, CBRE Middle East. However, business travellers currently do not choose Airbnb over hotels.

"Airbnb has forever changed the way people travel - around the world people are choosing the comfort and individuality of homes versus the sameness of hotels. Cost is a factor as well as space. For the same price as a tiny room in a hotel, travellers can get 1 or 2-bedroom spacious apartments with all the comforts of home and hotel [fully equipped kitchen, washer/dryer, TV, balcony, pool, gym and more]. Airbnb is also largely about the experience. Staying at someone's home miles away from yours is another way to connect to the city," reckons Anna Skigin, CEO and founder, Frank Porter, an Airbnb management firm.

The growth in popularity of Airbnb combined with additional supply of hotel rooms in Dubai is likely to sustain downward pressure on revenue per available room. This accommodation format is more likely to pose a challenge to mid-scale hotels and unbranded hotel apartments with limited services and facility offerings.

"Airbnb has had a limited impact on the hotel sector to date. It is, however, interesting that the DTCM is seeking to broaden the lodging market in Dubai, which has traditionally been heavily focused on the 5-star sector," points out Craig Plumb, head of research, JLL Mena.

Homes available for short-term rental on Airbnb are typically located within areas such as Dubai Marina, Palm Jumeirah and Downtown Dubai. "Existing hotel accommodation within these areas comprise primarily 4 and 5-star full service hotels and hotel apartments with extensive facilities and amenities," adds Qi Shen.

"Traditionally, average daily rates for Airbnb have been at a premium over hotel ADR levels, driven partly due the popularity of the short-stay accommodation format in premium locations such as Jumeirah Beach Residence, Dubai Marina and Downtown. Going forward, as the market matures, we can expect more affordable, short-term options being introduced in the market appealing to a cost-conscious traveller," says Vikram Malhotra, head of hospitality advisory, Middle East at Cluttons.

The timeshare market in Dubai has not gained a huge amount of traction when compared to more established timeshare locations in other geographies. Dubai is expected to roll out new timeshare legislation in the coming months.

Dubai Tourism recently held a workshop on vacation ownership at the Arabian Travel Market 2018. Representatives from the world's biggest players in the vacation ownership industry attended to know how to facilitate the growth of this sector in Dubai.

"We are aware of only a handful of operational timeshare property clusters within Dubai and select under-construction projects where timeshare operators have committed to bulk-purchase units. It's therefore likely that this sector is under-exploited, however further regulation will be required before we see international operators moving into the Dubai market. In geographies where regulations are already in place to protect investors, timeshare properties allow a capital-light ownership structure with the benefit of property use for personal vacations, or a rental income in lieu of use," informs CBRE's Qi Shen.

Dubai's transformation as a tourism destination, with its emphasis on family-friendly attractions and affordable accommodation coupled with a changing visitor profile bodes well for the timeshare product.

"Dubai has the potential to emerge as a leading hub for timeshare due to its value proposition of world-class retail and entertainment options. The DTCM plans to list 500 to 1,000 timeshare units aimed at increasing the number of family tourists annually besides encouraging tourists to stay longer and make frequent visits," concludes Malhotra.

- deepthi@khaleejtimes.com