Abu Dhabi-based Jannah Hotels and Resorts expects to expand to Ras Al Khaimah this year as it looks to tap into the undersupplied market in the emirate.
The hotel operator, majority-owned by Abu Dhabi’s family business Bin Rubayeh Group, expects to manage 100 hotel apartments and 24 villas of three to five bedrooms called the Jannah Resort and Villas in December. The villa prices are marketed at Dh3,600 per night. The development is located in Rak Properties’ seafront Mina Al Arab project.
“Ras Al Khaimah is close to Dubai, and we can have packages for people staying in Dubai as well as Ras Al Khaimah: it has an airport, and today it is not an overcrowded or oversupplied market,” said Nehme Darwiche, the chief executive of Jannah Hotels and Resorts. “For an investor, now is the perfect time to penetrate the market.”
At the end of May, Ras Al Khaimah had about 5,000 hotel rooms from 20 properties, with a pipeline of 16 properties including 4,400 rooms, according to research company STR.
In 2020, Jannah Hotels and Resorts also expects to open a mixed-use high-rise tower in Sharjah that would include retail space, offices, hotel apartments and a hotel. It would be owned by the Bin Rubayeh Group.
In January next year, it expects to operate 93 serviced residences for stays longer than six months called Jannah Residences in Abu Dhabi.
In the next year, it expects to start operating the 152-room, five-star Jannah Creek Dubai property under construction by the Dubai-based conglomerate SS Lootah.
Dubai’s room rates have been falling over the past year as oversupply is putting pressure on profitability.
Through June this year, the average room rate in Dubai’s four and five-star hotels fell 7.8 per cent compared to the same period last year, while the average occupancy fell 3 percentage points to 80 per cent during the same period, according to Hotstats data released on Tuesday.
“No one makes an investment for today, we look at five to 10 years [for return on investment],” Mr Darwiche said.
The drop in hotels’ profitability also coincided with the drop in global oil prices. In June, the average price of crude was US$45.84 per barrel, compared to $60.21 per barrel last June, according to Statista. The prices, however, are higher than the January low of $26.5 per barrel.
In June, the average room rate in Dubai’s four and five-star hotels fell 9.2 per cent year-on-year to $172.55 from $190, according to Hotstats. The average occupancy fell 16 percentage points to 51 per cent in June from 67 per cent a year earlier.
Jannah Hotels, which started in 2013, could expand outside the UAE after 2018, with Saudi Arabia and Morocco as focus markets.
Jannah Hotels manages Jannah Burj Al Sarab in Abu Dhabi, serviced apartments Jannah Eastern Mangroves Suites and Jannah Place Abu Dhabi, while in Dubai it operates Jannah Marina Bay Suites and Jannah Place Dubai Marina.
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