More rooms at the budget hotels

Mid-segment or budget hotels are expected to add 3,000 rooms over the next three years, according to a senior industry executive. "Our estimate is that in the UAE market, there will be a need for over 3,000 additional mid-segment priced rooms [Dh150 to Dh250 per room night] in the next three years," Russel Sharpe, chief operating officer of Citymax Hotels, told Gulf News. He added that 15 to 20 per cent growth can be estimated for the economy hotel industry in 2012-13. Citymax Hotels, which is a part of the hospitality division of the Landmark Group, is pursuing an aggressive growth strategy and plans to increase its regional footprint.The company plans to open 10 new hotels in the Middle East and Asia over the next five years, according to Sharpe. It currently has three properties in the UAE — two in Dubai and one in Sharjah. "We plan to open a few more mid-market hotels in the UAE by 2013 to add to our existing portfolio," he said. The company is conducting feasibility and diligence studies to expand in the Gulf Cooperation Council and Asia. Citymax will be placing special focus on the UAE, Qatar, Saudi Arabia and India, said Sharpe. He believes that the budget hotels sector is expected to mature especially in Dubai. "Due to the political unrest, especially in other GCC countries and a sharp increase in the number of budget airline routes connecting Dubai to the rest of the world, there has been a marked increase in demand for budget hotels in Dubai that promises a safe haven for tourists," said Sharpe. Meanwhile, the Citymax Hotels in Dubai and Sharjah enjoy an average occupancy rate of 85 per cent throughout the year, says Sharpe. The company expects the RevPAR (revenue per available room) to grow at 8-10 per cent per annum over the next few years. The share of the market held by budget and mid-scale hotels in the Middle East is low, thus the sector offers good potential for profitable investment, Deloitte consulting director Costas Verginis said recently while addressing the annual Arabian Hotel Investment Conference (AHIC) in Dubai. Dubai Citymax Hotels is in talks with various players for a possible acquisition. Asked about the company's potential deals, Sharpe did not divulge any details, saying only: "Acquisition plans and discussions are constantly underway with several potential partners." He added that the company is expected to announce acquisition plans "as and when a decision is taken". New brand Citymax last year was mulling the launch of another hotel brand under the Landmark Group umbrella. "Landmark Group is often posed with interesting proposals for expansion. While we are always reviewing new opportunities and are in discussions with potential partners, at this point we don't have anything to share. When any of these ongoing conversations reach fruition we will announce them," Sharpe said. Citymax, according to Sharpe, has a choice of three business models that it considers while growing the company — "acquisitions, leased properties, or the management-only model".