The homegrown budget hospitality brand Time Hotels is expanding in Abu Dhabi and beyond in a sign that midscale hotels are attracting investment from developers.
Founded in 2007 owning hotel apartments, the Dubai-based, Sharia-compliant hotel management company will open its third furnished residential building with 264 apartments in Abu Dhabi by the middle of this year. It is also in discussions to open a four-star boutique hotel in the city. Last month it opened a hotel apartment in Ajman with 160 units.
The company now has two four-star hotels and four hotel apartments in Dubai. The Time Residences in Abu Dhabi opened in November and a 72-unit apartment building in January.
“We plan to have 20 hotels and hotel residences in our portfolio by 2020,” said Mohamed Awadalla, the chief executive and co-founder of Time Hotels.
The possibilities created by Expo 2020 is a clear focus of excitement for the group.
“It will bring a lot of business to Dubai, and we are preparing and looking to sign more management [contracts],” Mr Awadalla said. “Moreover, I think Abu Dhabi will also benefit from Expo 2020, and that’s why we are looking at the market.”
The mid-market segment is expected to grow the fastest in the UAE in the next five to 10 years, said Filippo Sona, the head of the hotels division in the Middle East and North Africa at Colliers International.
And there is room to grow in Abu Dhabi, where the majority of the budget hotels are unbranded.
In Abu Dhabi emirate, 62 per cent of the budget hotels are internationally branded, 22 per cent locally branded and 15 per cent are unbranded.
Emerging budget hotels are targeting many leisure travellers who prefer spending less on accommodation and more on shopping and entertainment.
“It also stimulates repeat visitation,” Mr Sona said.
Since budget hotels have low running costs, it is an asset class that is recession-proof, he says.
It costs between US$100,000 to $110,000 to develop an 18 square metre economy room. In the luxury segment, the price can be anywhere between $400,000 to $1 million for a 45 sq metre to 55 sq metre room.
Dubai will have 2,443 economy hotel rooms by 2017 in addition to those planned and under construction, according to Mr Sona.
Time Hotels is scouting to add a luxury property in its portfolio but does not plan to move away from its budget focus, Mr Awadalla said.
“What we do at the four-star category is of a high standard, and with mid-market hotels we can make more money for the owners. We came into a market that is competitive and we needed a quick and fast return for the owners.”
The hotel management company has also set its sights on the wider GCC and Middle East.
Despite the unrest in Egypt, Time Hotels will go ahead with the scheduled opening of its property in Luxor at the end of the year. Called Time Tut hotel, construction of the 163-room property is almost 90 per cent complete.
“We had thought after the revolution things would settle down, and they didn’t, but I still think after elections things will get better,” Mr Awadalla said.
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