Dubai cannot continue relying purely on luxury hotel segment: Erlend Heiberg

by | 24 Oct 2017 | Experts

There’s huge demand for more mid-market hospitality offerings in the Middle East, presenting new opportunities for the region’s hotel industry, says Erlend Heiberg, former director at Horwath HTL.

Erlend Heiberg headed Horwath HTL’s UK office in London, and was director of the Horwath HTL offices in Dubai and Oslo.

However, he was actually a trained chef who went back to university to study hotel and finance. “That’s how I’ve ended up in real estate rather than kitchens,” Erlend joked.

With more than 25 years of international operational hotel and hotel real estate experience across Europe, Middle East and Africa, Erlend previously worked with a number of the major consultancy firms in the industry, including three years in Dubai, prior to joining Horwath HTL London in 2009. Before moving into advisory, he worked for InterContinental Hotels & Resorts in New York, Paris and London.

Erlend spoke exclusively to TOPHOTELNEWS at TOPHOTELWORLDTOUR Dubai 2017 about how Dubai and the region needs to evolve to cater to rising demand in mid-market hotel segments as well.

On why Dubai’s hotel industry needs to restructure

Erlend: I think one of the biggest challenges for the industry in Dubai is we’re seeing how it has to restructure itself. Historically, it’s been a luxury market; everyone’s built five-star hotels. People have been willing to pay 1,500 to 2,000 dirhams a night without asking a question. Also, the industry has been growing: we’re now at about 100,000 rooms in Dubai, and with a pipeline of about 250,000 rooms. But the industry has to look for new source markets, and the natural supply of customers for Dubai is actually Asia. You’re seeing how these markets are developing at a fast pace between China, India and Iran, for example.

Dubai’s new clients not used to paying for luxury segments

Erlend: Historically, Dubai has been focusing largely on the development of upper upscale and luxury products. Unfortunately, the new clientele coming into the market are not used to paying the prices for those segments. They are actually looking for a product that gives them the opportunity to visit Dubai for a price they can afford to pay. And I think there’s a great opportunity for Dubai going forward to actually continue growing its immense tourism industry.

Huge demand for mid-market hotel products

Erlend: Dubai can’t continue just relying on the luxury segments. There is a huge demand for more mid-market hotel products; new lifestyle products that meet the requirements of the millennials. The industry is changing. We are no longer just expecting to stay in a traditional luxury hotel. People want something more exciting and that can actually be cheaper to develop and cheaper to run, which gives new opportunities to the industry.

Erlend Heiberg was a delegate at TOPHOTELWORLDTOUR Dubai 2017. To attend, address or sponsor our boutique hospitality networking events around the world, contact the TOPHOTELPROJECTS team.

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