The Home-grown Emirati hotel brand Royal Continental plans to increase its visibility in the country with a property along Dubai Canal ahead of Expo 2020 despite increasing pressure on room rates.
Its first property, the 168-room Royal Continental Hotel Deira opened yesterday. The Sharia-compliant, four-star hotel, plans to focus on guests from Saudi Arabia, India, China, Russia and the UK.
“Dubai is being promoted as a family destination, so it wants to be feasible for families to come, and mid-range hotels are a part of this strategy,” said Wajeed Bagwan, the general manager of Royal Continental Hotel Deira.
In December, a peak season for the hospitality sector, the average room rate in Dubai fell 8.4 per cent year-on-year to touch Dh824.58 as new properties continued to come on stream, according to the data firm STR. Occupancy rates, however, edged up 3.2 per cent to 79.7 per cent.
The Royal Continental Deira will be followed be a five-star property on the Dubai Canal waterfront next year. Currently under construction, it will have 133 rooms. When open, it will compete with hotels that are expected to come up in the area that already features the Al Habtoor hotel complex comprising the W, Westin and Ritz-Carlton.
Royal Continental is also developing a 425-room, five-star property in Jeddah and hotel apartments in Al Mafraq, Abu Dhabi, with about 150 units.
Analysts, meanwhile, expect investment in hotels in Dubai to continue despite pressure on room rates in the past year.
“Due to availability of land holdings and an established development model by major players, development projects will continue to remain the forefront of investment activity,” said Marko Vucinic, the senior vice president for Middle East and Africa for the hotels division at JLL.
Revenue per average room (Revpar), a measure of a hotel’s profitability, is expected to fall in Dubai, according to Colliers International yesterday.
Properties along Sheikh Zayed Road and near Festival City, Dubai Creek, are expected to record the steepest declines at 10 per cent year-on-year in Revpar. These will be followed by hotels in Dubai Marina at 8 per cent decline. The Palm Jumeirah properties with their waterfront locations are expected to experience 2 per cent declines in Revpar this year.
Royal Continental is among several companies owned by Mohammad Al Menhali, a stakeholder in Abu Dhabi Business Hub and Gulf Resources Development and Investment.
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