UAE: Colliers International says 10,000 additional serviced apartment units are needed to fulfill projected demand in Saudi Arabia, the UAE and Qatar.
Colliers International has released its latest report on the GCC
serviced apartment sector, focusing on the outlook for the United
Arab Emirates, Kingdom of Saudi Arabia and Qatar. The report, headed by Colliers' Filippo Sona,
director and head of hotels for the MENA region, predicts that this
market could potentially absorb an additional 9,856 serviced
apartment units over and above forthcoming supply.
Summarising the investment landscape, the serviced apartment business model tends to experience less volatility due to less pronounced seasonality variances than other assets such as luxury and upperscale hotels allowing for more consistent and constant revenue streams for owners. One of the key strengths of the serviced apartment business model is its versatility, hence being able to change the target market profile between long and short stay to suit market conditions in order to achieve revenue maximization. Brand strength is a strong driver of serviced apartment demand with GDS, direct bookings, and hotel website bookings accounting for 40 per cent of total bookings. A strong brand with a regional presence and strong online capabilities is essential to help and drive sales in all three markets (UAE, KSA, Qatar).
UAE - The first six months of 2013 has seen positive growth for serviced apartment occupancy levels in the UAE. During this period, occupancy levels have increased by 8.2% in Dubai, 5.5% in Abu Dhabi, and 20.3% in Sharjah. This sharp increase in Sharjah is indicative of an improving market after years of stagnation, although this has come at the cost of the average rate. Market Potential -2,836 units over and above the forthcoming supply in the UAE across Dubai and Abu Dhabi between 2013 and 2017.
KSA - There is a considerable gap between the locally branded furnished apartment supply and internationally branded serviced apartments such as inconsistent service standards, poor construction standards, and a lack of ancillary facilities. As such only 'first class' furnished apartments can be considered to be competitive with internationally branded serviced apartments. Market Potential- 6,495 units over and above the forthcoming supply across the Kingdom of Saudi Arabia between 2013 and 2017. The primary scope for development of these units are in the Province of Makkah, which contains the two key cities of Makkah and Jeddah.
Qatar - The vast majority of serviced apartments in Qatar are located in Doha, of which 79% of the total unit stock is currently classified in the 'Deluxe' category and 21% is classified in the 'Standard' category.Whereas serviced apartments in the UAE mainly target short stay guests as a means to maximize revenue, this is not the case in Doha, in which the long stay segment represents 74% of total demand. Market Potential- 525 serviced apartment units over and above the forthcoming supply in Qatar between 2013 and 2017.
The branded serviced apartment market in Saudi Arabia is the least penetrated with international operators. There still represents a market gap for 'lifestyle' extended stay concepts in these markets, and international brands entering the market will be a critical success factor in attracting demand particularly from the inbound travel segment.