Premier Inn sees growth amid slump

Budget hoteliers in the UAE are eager to expand as the global economic slowdown hits upmarket competitors.

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Budget hoteliers in the Emirates are eager to expand as the global economic slowdown looks likely to have an impact on its high-end competition. "Whenever there's an economic crisis, budget hotels are the ones less impacted because our prices are more competitive," said Darroch Crawford, the managing director of Premier Inn in the Middle East. The British budget hotel chain, which has a partnership with Emirates Group in the ­region, is planning a rapid expansion in the UAE after securing several sites in Dubai, Ras al ­Khaimah, Umm al Qaiwain, Abu Dhabi and Fujairah to develop six hotels. "There will be two hotels in Dubai located in the Silicon Oasis and another near the airport, while one hotel will be developed in the remaining emirates," said Mr Crawford. The Dubai hotels would be completed by the end of next year and the remaining hotels by 2010, he said. "We have an equal share partnership with Emirates, so as a company we both own and operate the hotel, unlike the traditional business model of just having a single management contact," Mr Crawford said. The cost of developing a hotel was about Dh150 million (US$40.8m), he said, while rates would start at Dh495 per night, including tax and service charges. Gerald Lawless, the executive chairman of the Jumeirah Group, owners and operators of the seven-star Burj Al Arab in Dubai, said Dubai led global hotel statistics with an average room rate of US$283 (Dh1,040) last year. Other Gulf cities also topped the $200 mark last year. "The average rates we are now enjoying may level off, but I don't see them decreasing," he said. Premier Inn already has a hotel open in Dubai ­Investment Park. "We have been open for about four months in Dubai and so far about 80 per cent of guests are business travellers - there's a huge potential in that segment," Mr Crawford said. The company is targeting Saudi Arabia, Oman and Qatar, and aims to operate more than 6,000 rooms in the GCC region by 2012. "The hotels in these countries will be slightly smaller, with about 200 rooms instead of 300, because we still don't know these markets, and by having a smaller hotel it would minimise the risks involved," Mr ­Crawford said. Other hoteliers have also started developing the budget end of the market. Earlier this year, the French group Accor Hospitality announced plans to open 90 hotels in the Middle East by 2011, predominantly under its three- and four-star brands, Ibis and Novotel. "There are too many people in the luxury and five-star area in the UAE," said Eric Lepleux, the chief marketing officer for Accor Hospitality. By the end of 2010, the company hopes to have 55 hotels in the region, up from the current 35. Since May, the company has set out to open a hotel in the region every month until 2010.