UAE to see sustainable growth in hospitality sector post Expo 2020
Experts have described the pandemic as a “unique reset opportunity” for the UAE's hospitality sector
The UAE’s hospitality sector will continue on its path of sustainable growth after the Expo 2020 Dubai event, driven by pent-up demand for international travel and travel restrictions being continuously eased across various geographies, experts said at the 2021 Arabian Hotel Investment Conference (AHIC 2021).
Guy Hutchinson, president and CEO at Rotana, highlighted the state of recovery in the industry right now, saying: “Recovery is a combination of different factors including airline networks, health departments, rules and regulations revolving around quarantine, and travel agencies highlighting destinations. What we are now seeing is a pretty systematic reopening of international markets. Emirates Airline, for example, is currently operating at around 90 per cent of its network pre-pandemic and this is reflected in the numbers that we are seeing at our hotels.”
Another major factor that is aiding recovery, he said, are major events such as Expo 2020. “As we get into the third and fourth quarter of this year, we will in Dubai be somewhere close to 90 per cent of the RevPAR that we recorded in 2019. These strong expectations will continue into 2022 when we expect to see the full recovery to pre-pandemic levels by the end of that year.”
What events such as Expo 2020 have done, he said, is to “restore” the industry back to 2019 levels. “This will be the catalyst that accelerates out path to recovery.”
A key factor that will continue to be important, he added, is the “discipline” around safety. “This is something that needs to stay because it is a major factor in making the UAE an attractive destination for travellers from around the world, and directly contributing to a better pace of recovery compared to many other parts of the world. There are so many different perspectives that people have about travel – some people refuse to travel while others are already travelling – but the key element that everyone wants is the assurance of safety.”
Looking back, he described the pandemic as a “unique reset opportunity” for the hospitality sector. “We were given the opportunity to really re-think what we do and how we do it. When you focus on expansion and growth, sometimes there are things that you take for granted, so this pandemic has made us reinforce that in our core values. An increased focus on sustainability and wellness is another thing that we really hope will continue in the coming years. Lastly, this pandemic has brought the industry and all its different players together in a way that it closer than we have ever been before.”
Marcus Bernhardt, CEO of Steigenberger Hotels AG/Deutsche Hospitality, noted that markets such as the Middle East and China are taking the lead in terms of recovery, but that markets such as Europe are still struggling and will face tough times ahead.
Certain hospitality trends, he said, will continue to be important in the coming months, such as catering to the needs of the business community by ensuring that they can work comfortably from different locations. “Of course, working from home is something that will stay, but it is now a question of how many days in a week you will be doing that. We are already seeing employees happy to be back in an office setting and seeing each other again. From a security and health point of view, employees will continue to be concerned about who they are meeting and interacting with when they go outside. Large scale events such as conferences will not be happening as often as they did before, and when they do, there will be hybrid models.”
People, he said, will have to adapt by keeping in mind the restrictions of the market that they are operating in. “What we foresee is a light recovery; in terms of recovery to where we were in 2019, we don’t see that happening until the end of 2023. If you look at the predictions coming from IATA for the airline industry, they are standing by a full recovery in 2025-2026. We are closely related to that industry, not only for business but also for leisure. I am happy to say that leisure is picking up mainly because of the people not spending their money during the lockdowns and they now have the ability to spend on a holiday for them and their families. On the B2B and MICE segment, we expect to see it take a bit more time.”
Bernhardt also identified an increase in the popularity of lifestyle hospitality brands. Visitors, he said, are looking for something different and unique that they can experience. “We are also trying to look at digital natives as a new demographic that we want to attract more of. When we talk to investors, especially in this part of the world, they are all keen to invest in lifestyle hotels, and this is good for the industry because it means that we are still innovative and not sitting back and waiting for the pandemic to end.”
He added: “The pandemic has created a new way in which investors are looking at portfolios; it is becoming complicated to raise funds in this kind of environment and banks are critical about investing in high-end luxury products so we have seen a shift towards lifestyle brands which demand a smaller investment. It is not a new trend, but something that we have seen accelerating in the market.”