Low risk Dubai magnet for hotel investment says industry chief Scully
25.04.2012: Political stability, heavy investment in tourism infrastructure, integrated marketing strategy and solid growth prospects boost investor confidence in Dubai
Political stability, heavy investment in tourism infrastructure, integrated marketing strategy and solid growth prospects boost investor confidence in Dubai
Speaking ahead of the annual Arabian Hotel Investment Conference 2012 (AHIC) which takes place in Dubai on 28-30 April, Michael Scully, Managing Director Hospitality at Dubai-based hotel developer and hospitality consultancy Seven Tides, will pinpoint how Dubai attracts hotel investors seeking a low risk investment landscape as well as a sustainable return on investments at a time when many economies are facing the real prospect of a recession.
“Risk management is always at the forefront of investors’ minds and in that sense Dubai will continue to benefit from its reputation as a safe haven in a region affected by political change. Furthermore, heavy investment by the government into transport infrastructure, an integrated marketing strategy and sound growth prospects continue to cement Dubai’s position as the Middle East’s tourism hub,” commented Scully.
According to the Dubai government, trade, transportation and tourism accounted for around 60% of Dubai’s GDP in 2011 and are considered the cornerstone of the emirate’s now economic strategy.
In terms of transportation, Scully said risk-adverse hotel investors – coming mostly from Western Europe, Russia and the United States - would continue to be drawn by the emirate’s expansion plans for both its international airport and flagship carrier Emirates.
Dubai International Airport is set to become the world’s busiest airport as it looks to increase its capacity to 90 million passengers by 2018 from around 60 million currently while Emirates continues to add new international routes. Complementing its investment in air transportation, Dubai added a second metro line last year to connect the city from east to west, which is a big draw with GCC visitors.
Scully also highlighted the diversity of Dubai’s tourism sector as an added attraction for hotel investors. While Dubai offers the beach, sand and sun experience that has been effective in capturing Western demand, the emirate also boasts major sporting events, cultural tourism and a diverse retail experience at its numerous shopping malls.
“The entertainment value of Dubai comes high on the list of any potential hotel investor. Tourists heading to Dubai can enjoy a number of attractions including two major water amusement parks, desert safaris and boat trips,” added Scully.
Scully also recognised the role marketing has played in promoting Dubai: “Dubai’s marketing strategy is cohesive, sophisticated and above all effective, it gets the message across. Dubai has never been found wanting when it comes to self-promotion and this in itself breeds investor confidence.”
Turning to regional investment outflow, Scully said Middle Eastern investors would continue to scout for low return trophy assets at below peak market values in Europe and the United States, where economies have been hit hard by the global downturn.
“These investors generally have large cash reserves, can be egotistical and usually want greater visibility or a higher public profile,” he remarked.
Gulf investors, flush with petrodollars from oil prices consistently hitting $120 plus, per barrel, have made a raft of hotel acquisitions in Europe recently. These include the purchase of the prestigious Carlton Hotel in Cannes on the French Riviera, which was sold for EUR450 million, Le Royal Monceau – Raffles Paris, while late last year Middle East investors spent some US$500 buying luxury hotels such as The Sanderson, St Martins Lane and the W Hotel in London.
Jack Dulka,Shamal Marketing Communications Dubai also photo
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