Focus on mobile and mid market

With 423 main stand holders from 86 countries and a 4 per cent increase in visitor numbers noted over the first two days, the Arabian Travel Market was the perfect opportunity to feel the pulse of the industry
Arabian Travel Market took place from April 25 to 28 in Dubai welcomed 100 new exhibitors this year

This year’s Arabian Travel Market (ATM), which took place last month at Dubai Convention and Exhibition Centre from 25 to 28, welcomed 423 main stand holders representing 86 countries, with more than 26,000 visitors in attendance, according to latest reports. Boasting an extra hall, ATM 2016 had more than 2,800 exhibiting countries and 64 national pavilions, with 100 new exhibitors making their debut. A 4 per cent increase was noted in the number of visitors over days one and two compared to 2015.


Following the success of last year’s spotlight theme of family travel, the focus for the 23rd edition of ATM was on mid-market tourism – a key area of opportunity for Middle East destinations looking to diversify their source markets and attract a larger volume of visitors.

There are 538 hotels totalling 151,771 rooms under contract in the Middle East and 321 hotels totalling 62,194 rooms under contract in Africa, according to the January Pipeline Report from STR Global.

Makkah, Saudi Arabia, reported the largest number of rooms under construction with 21,068 rooms in 13 hotels. Three other markets reported more than 5,000 rooms under construction: Dubai (19,846 rooms in 63 hotels); Riyadh (6,738 rooms in 30 hotels); and Doha (5,980 rooms in 26 hotels).

Dubai currently has a total hotel key count of 94,000 and this figure is set to rise to between 140,000 and 160,000 keys by 2020 with around 20 per cent set to target the mid-market hotel sector, according to a recent Knight Frank report.

'Dubai will be home to somewhere between 20,000 and 35,000 mid-market rooms by 2020 and this surge in supply supports the PwC research, which flags a growing global movement away from luxury, and towards affordability, even from those for whom budget is not a primary concern,' says Nadege Noblet-Segers, exhibition manager, Arabian Travel Market. 'This is being driven predominantly by the rising affluent middle class in key markets such as Asia, and with Dubai set to host Expo 2020 and Qatar, the 2022 FIFA World Cup, the mid-market segment is the fastest growing in terms of demand and pipeline.'

According to PwC, Dubai currently has a tally of 98,333 hotel and hotel apartment keys, with future supply through to 2020 expected to add a further 20,363 keys, of which around 56 per cent will be within the five-star bracket, leaving ample room for additional three- and four-star product to enter the market.

Comparing the city’s current offering to other major international destinations, Dubai is lagging behind in terms of mid-market product at 51 per cent with 88 per cent, 89 per cent and 90 per cent of hotels in London, New York and Los Angeles in the affordable bracket; 66 per cent of all Paris’ accommodation ranked mid-market and 76 per cent in Hong Kong.


Data from travel industry research authority, Phocuswright, has revealed that mobile transactions from Middle East travellers are set to hit double digits for the first time ever in 2016 as consumers become increasingly comfortable using their handheld devices for travel purchases.

Phocuswright’s Middle East analyst Jeff Strachan, says, 'Transactions from mobile devices are expected to cross 10 per cent this year, reaching double digits for the first time in 2016. With exciting trends like ever-improving technology infrastructure and a young population with an appetite for travel, the Middle East region is poised for enormous growth in the next three years, both online and off; and companies need to stay ahead of the curve in order to remain competitive in the area.'

The latest round of Phocuswright research also highlights the growth in online penetration in the region, which is on track to hit 31 per cent of total revenues in 2016, up from 25 per cent in 2014 and 27 per cent in 2015; with 19 per cent of all revenues delivered online via supplier-direct websites, and 12 per cent of all revenues emanating from online travel agencies (OTAs).

OTAs are also gaining hotel revenue share according to the data. In 2014, 56 per cent of all OTA revenue was attributed to airlines; whilst in 2016, 46 per cent is forecast to go to hotels, with airline share dropping to 52 per cent.

'There’s been a huge surge in confidence in the security of online transactions in the Middle East in the last 12 months and, as more and more people across the region start to rely on their mobile devices as a speedy, secure and reliable way to get things done, this can only increase. From everyday transactions such as bill paying to bigger and more emotionally driven purchases such as hotel stays and holidays, online is rapidly replacing offline interaction,' said Nadege Noblet-Segers, exhibition manager.

According to Phocuswright, OTAs represent 75 per cent of all online revenues to hotels, and 28 per cent of all online bookings to airlines, who have a much better online direct performance (61 per cent from website direct and 11 per cent via mobile).


In light of all this construction news, BSI, the world-leading business standards company and respected international certification body, provided a compelling case for organisations in the region to adopt international best practice standards and certifications. Dubai Corporation for Tourism and Commerce Marketing (DCTCM) ups its efforts on encouraging hotels and hotel apartments in the Arabian Gulf to take part in green tourism initiatives and awareness programmes.

'Airlines and hotels are becoming much more conscious about being environmentally friendly,' Omar Rashid, general manager, Training and Professional Services, BSI, said. 'This is being driven by the rise of the eco tourist and a desire to cater to them by showcasing eco credentials, such as how you deal with waste and how you recycle and manage your carbon footprint, for instance. Customers are increasingly asking tour operators in the region, particularly in Africa, how operators are complying to international standards.'


Mid-market profitable for owners

PWC report authors believe that while higher five-star rates coupled with the current high occupancies enjoyed by the market in Dubai does make for an attractive investment opportunity, developing a mid-market hotel on the same plot of land can result in similar cash flows to the developer/owner.

This is due to smaller room size requirements, less landscape areas, leisure facilities and other ancillary experience-based offerings. A typical plot of land that can accommodate 250 five-star rooms may be able to accommodate 500-plus mid-market hotel rooms with the same allowable gross floor area, said the report; thus allowing similar commercial benefit. It is also possible to build from as low as $80,000 per key.


Mid-market hotel percentage

Dubai              51pc
London           88pc
New York      89pc
Los Angeles    90pc
Paris               66pc
Hong Kong     76pc