• Hotel Re-Generate: mega trends impacting hotels

Hotels must speed up the shift to tech-enabled practices to remain relevant in a diluted market

In 2017, hotel occupancy levels rose by 0.5% to reach 75.1% in the United Arab Emirates (UAE), but the proportion of the average daily rate dropped 3.8% in 2017. In the wake of a challenging global travel landscape, new market entrants, and the rise of online intermediaries, hotels face a new reality in which the brands that will survive will be the ones that can attract and anticipate the multi-faceted needs of the increasingly discerning and digitally native new traveller looking for unique and authentic experiences, according to a new report from Grant Thornton UAE, published today.

Launched at the 14th edition of the Arabian Hotels Investment Conference in Ras Al Khaimah (RAK), UAE today (17 April), the report Hotel Re-Generate: Mega Trends Impacting Hotels considers how hoteliers in the UAE can generate new business and grow their existing market in this age of tech-disruption, shifting socio dynamics and evolving guest preferences.

Online and mobile transactions are taking a larger share of the travel market, particularly given the demographics of the region in which 40% of the population is under 25, and with the UAE, a country where mobile phone penetration at 228%, is expected to launch game-changing 5G technology in 2018. Laggard organisations who fail to be a part of the digital movement online will experience the loss of essential user-behaviour based data which will be key to driving strategy.

86% of travellers now view personalised offers as central to their decision making when making a purchase. The deployment of smart technologies such as artificial intelligence to analyse a guest’s profile, past buying behaviour and social media preferences to make customised offers presents hotels with the means to drive mass-personalisation and unlock new revenue generation potential. Possessing the necessary data together with investing in the right tools and technology could reward hoteliers with increased revenue of as much as 6%.

Hisham Farouk, CEO and Global Board Member at Grant Thornton United Arab Emirates states “in the future, hotels will no longer be viewed as just accommodation providers. The modern traveller expects more, and will be attracted by a holistic set of solutions and bespoke packages. Hotels must leverage cutting edge technology to ensure every guest interaction is personalised and meaningful.”

While Dubai ranks as the sixth most visited destination in the world and continues to strengthen its position as a regional business hub, Grant Thornton’s report considers the notion of intercity competition as Abu Dhabi and RAK continue to build their position in the market to attract a wider share of visitors.  The data shows that RAK is beginning to emerge as the country’s hidden gem, with its hospitality sector expected to witness continued growth with occupied room nights forecast to reach 35.5m annually in 2019 and amounting to a healthy 10.2% compound annual growth rate (CAGR) over the next 24 months.  

The market dynamics of the UAE will continue to add ongoing pressure for hotels, specifically given the investment landscape, entrepreneurial flair and ease of doing business in the region continues to develop. Such market forces will continue to see a migration of competitors and new solution providers, which will push hoteliers to think and act differently. Organisations that fail to navigate and apply big-data into its strategy will need to prepare for its customers to be lured away by new market entrants, entrepreneurial businesses and tech-enabled challengers at a click of a button.