Dubai Properties has signed a deal with Starwood Hotels & Resorts for four new mid-range hotels in Dubai.
The agreement means Starwood will open three of its Aloft-branded hotels and one Element hotel – both of which are new brands to the city. They will all be based in newer areas of the city along the Sheikh Mohammed bin Zayed Road corridor.
The 168-room Element and a 221-room Aloft hotel will be based within the International Media Production Zone, a 220-room Aloft will be at Dubai Studio City and a 227-room Aloft will be opened within the Du- Biotech district. The four properties are due to open in 2018, with 816 mid-range rooms due to be added ahead of the Dubai World Expo 2020.
Starwood said the deal would strengthen its mid-range portfolio in the Middle East. This year, it has announced plans to open 11 mid-range hotels, representing 50 per cent of its regional pipeline.
Starwood operates 51 hotels and resorts across the Middle East, including 15 in Dubai – making the emirate its second-biggest market after New York City.
“The hotels under the Aloft and Element brands will offer two new concepts to the existing mid-market category in the emirate, which will emerge as a vital segment in the run to the exposition,” said Naaman Atallah, the chief executive of Dubai Properties. “The time is right to launch new hospitality projects as demand for new hotel rooms continues to increase and culminate around this major event.”
Simon Turner, the president of Starwood’s global development arm, said the demand for its mid-market hotel brands continues to grow.
“This is particularly true for Aloft, where signings have more than doubled globally versus the same time last year, including a surge of signings in the Middle East.”
In the first half of this year, Dubai experienced a 6 per cent fall in average daily rates to $249 per night, according to the consultants JLL. Occupancy rates also fell, which meant that revenue per available room, a key earnings measure, dropped by 9 per cent to $208 per room per night between January and May.
JLL said it expected further falls in rates during the short to medium term as a further 30,900 rooms were expected to be added over the next few years.
Chiheb Ben Mahmoud, head of the hotels and hospitality group at JLL Mena, said the falling rates “continued to reflect the impact of the drop in the number of tourists from Russia and the euro zone”.
He said that hoteliers had adjusted room rates downwards to sustain occupancy levels, with average rates 7.2 per cent below a 10-year historical average.
He added that this highlighted “the need for hotel owners and operators to focus on operational efficiencies”.
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