Dubai’s Mall of World could see 80 new hotels
13 AUGUST 2014 1:31 PM
Dubai’s temperature-controlled indoor city development will spark new demand. Local experts say the 8-million-square-foot development could see 80 new hotels.
DUBAI, United Arab Emirates—Dubai’s newest mega project, the Mall of the World, boasts 20,000 extra beds, which local industry consultants said will be absorbed easily as visitor numbers surge between now and 2020.
Approximately 80 hotels and 20 serviced-apartment buildings will inhabit the 8-million-square-foot, temperature-controlled indoor city, according to developers Dubai Holding, along with 4.5 miles of retail space reminiscent of California’s Rodeo Drive and England’s Oxford Street, a domed theme park, as well as cultural and wellness districts.
As part of the Mohammed bin Rashid City mixed-usage project of villas and gardens on coastline-skirting Sheik Zayed Road, the plan is to have the multibillion-dollar mall completed in time for the World Expo in 2020.
During the same timeframe, Dubai's Department of Tourism and Commerce Marketing hopes annual visitor numbers will rise from 13 million in 2013 to 20 million, and the hotel and hotel apartment room inventory to almost double from 84,500 to 160,000.
“Current demand and supply analysis suggests that an estimated additional 35,000 to 40,000 hotel rooms will be needed in order to cater to this demand. The Mall of the World will be within easy reach of the current city center (Downtown Dubai), as well as popular leisure areas such as Dubai Marina and the Palm Islands,” said Vikram Loomba, hospitality development and investment specialist at PricewaterhouseCoopers in Dubai.
The new development, Loomba said, will become a major tourism magnet and drive hotel demand. Although the project is in its early stage, he said it should attract hotel operators across the sectors.
“It is in the development's interests to have a variety of hotel brands across various price points from budget to luxury. Its climate-controlled nature promises a destination which will ideally be able to operate all year round, helping hotel operators effectively battle the current seasonal nature of the industry in Dubai,” he said.
“The mall will act as a major demand generator for retail enthusiasts, leisure and wellness travelers, as well as families. The combined effect of these factors should be sufficient reasons for any hotel developer and operator to actively pursue opportunities within this development.
“Clearly the economic feasibility of projects will also play a significant role in determining the type and category of hotels to be planned,” Loomba said.
While revealing no details of particular hotel projects, Ahmad Bin Byat, CEO of Dubai Holding, confirmed that hotels would cross the spectrum from the high end to boutique and budget.
He said hotels also would fall within the project’s environmental guidelines, using state-of-the-art technology to reduce energy consumption and carbon footprint, and allow operational efficiency.
Dubai-based Guy Wilkinson, managing partner of Viability Management Consultants, said the mall is now in an “active-planning” stage with contractors to be appointed soon.
He too expects a wide range of hotel management chains and brands to put up their hands for a place at the mall, given the increasing success of the retail hotel formula in the Middle East.
“Bear in mind that hotel owners and operators are almost always separate entities in this part of the world. Two previous mega-mall projects in Dubai have had a 'honey pot' effect for hotel developers—Majid Al Futtaim's Mall of the Emirates, around which a whole district has grown up in just a few years, and the Dubai Mall, part of Emaar's master-planned Downtown district, which has also grown up very quickly,” he said.
“The most luxurious hotels tend to be integrated with or adjacent to the malls—Kempinski and Sheraton at the Mall of the Emirates, The Address at the Dubai Mall—then in circles emanating out from the malls, you find hotels and hotel apartment buildings of progressively lower-star ratings,” he added.
Wilkinson said it will take 10 to 15 years for all the hotels to be built from the time the project gets off the ground, in which time the demand will be there to absorb the beds.
“Individual developers will need to buy plots in MBRC, then plan and develop the individual hotel projects,” he said. “Dubai's airport is already No. 7 in the world in terms of passenger throughput and should overtake Heathrow (now No. 3) by 2015.
“MBRC is a full mixed-use project with other leisure elements such as a theme park and an arts district, both of which would also generate hotel demand. There will also be lots of housing. Hoteliers would not normally rely solely on demand from the mall or the immediate vicinity, so I would expect these hotels to target a mix of tourists and business people, as is normal with the other city hotels in Dubai,” Wilkinson said.
He does not expect Dubai Holding’s ownership of the Jumeirah Group to translate into a Jumeirah-top heavy mall or brand favoritism.
“Jumeirah is now expanding mainly through management contracts. I doubt they will have any hotels built specially for them in this area, and I think they will have to compete on equal terms with other major upper-upscale chains and brands for the management opportunities that arise,” he said.
The Jumeriah Group declined request from Hotel News Now to expand on its plans at the mall.
President and CEO Gerald Lawless indicated to local media that the chain will be working with its parent company to investigate opportunities.
Accor has a penchant for mall hotels, and says it is actively discussing new opportunities with developers. The latest announcement of this kind is for a second Ibis at the Dubai World Trade Centre in 2016.
Christophe Landais, Accor's chief operating office of hotel services in the Middle East, said the Mall of the World thus represents great potential for the group to expand its footprint across its brands.
"Accor is vigorously looking for new opportunities to strengthen its leadership in Dubai, as the leading hotel operator in Dubai, with over 4,700 keys, 15 hotels and five hotels under development with another 1,740 rooms.
"In that respect, Accor is considering all upcoming major projects in the city. The Mall of the World Dubai being an iconic project is of great interest, and we look forward to exploring further opportunities in detail within this landmark project," he said.
As Accor looks into Mall of the World properties, the outlook is looking brighter for speedier realization of new hotel plans.
Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum’s move to simplify procedures for hotel investments in Dubai—reducing the wait for preliminary approval of projects from six to two months—is reportedly having a positive effect.