2018 hospitality forecast: Closing In

2018 hospitality forecast: Closing In
Published: 25 January 2018 - 5:10 a.m.
By: Devina Divecha

Millennials in Focus

The changing nature of travellers is no secret, but it’s certainly one that hoteliers are going to be increasingly focused on in the coming year. The millennial demographic is travelling more and more and its purchasing power is increasing as they become older. Research from FutureCast revealed that this demographic spends approximately $200bn every year on travel.

Ajami believes that demographics and social change is a key issue that will impact the tourism and hospitality industry in 2018. He shares data from a PwC report that revealed that in the Middle East, 40% of its people are under the age of 45. Ajami adds: “While historically the hospitality industry in the region was designed to cater to middle-aged business and leisure tourists, it must today transform itself to cater to a wider variety of visitors, age groups and backgrounds. The challenge, albeit an exciting one, is for hotel brands to bring forth a new age of innovation to attract new types of travellers.”

Rezidor’s Cordon adds: “As the purchasing power of the millennial generation increases we will see more hotel groups trying to tap into this market and reach and an increasingly important market.”

Millennials, or rather those who identify as millennials, are driving the trend behind experiential travel and authentic, personalised experiences. Majid Al Futtaim’s Mekouar adds: “Demographics of the millennials and generation Z travellers are increasingly shifting into the spotlight and they expect bespoke services.”

Trends and Directions Ahead

Other than agreeing on issues surrounding supply and rates, millennial travellers, technology, and airlines, there’s a number of opportunities and trends the hotelier experts are predicting in the years ahead.

One trend Cordon is convinced is set to boom is around MICE, and adds: “The increasing number of international conventions and conferences, especially in Dubai, which has successfully positioned itself as a global MICE destination with an increased number calendar of major international conventions year on year.” He also believes that the leisure attractions being developed and launched in the region are cause for celebration — referencing the opening of the Louvre Abu Dhabi as an example of how the UAE can further market itself to a global audience.

Saudi Arabia, a booming regional hospitality market, has its own set of changes to contend with. From sweeping changes in laws surrounding women driving and cinemas coming back to the Kingdom, hospitality is set to undergo a refurb of sorts. Ajami says that as part of the Kingdom’s economic diversification strategy, tourism is becoming a central pillar of the Kingdom’s Vision 2030.  “The country is aiming to welcome 1.5 million tourists in the next three years — clearly this new legislation and government reform is making the Kingdom more accessible than ever which is great news for our industry. As such, Saudi Arabia is now our largest market in the Middle East region in terms of the number of hotels we have open or in development,” he notes. Religious tourism, he adds, continues to be a major component of the hospitality sector in Saudi Arabia, creating a need for a range of accommodation options in the area.

Colliers’ Sona adds that in Saudi Arabia, a new trend will be branding of residential compounds with hotel brands. “This will enable residential developers to lease the unit as traditionally done on a yearly basis as well as taking some stock and rent it according to seasonality.  With an international brand the developer will provide consumer with a recognisable service level and potentially being able to attract slightly higher rents,” he adds.

For UAE, Sona believes the opportunity is to develop Ajman and Umm Al Quwain as new destinations. He also thinks, echoing the report in Hotelier’s December 2017 issue, that manchising (a combination of management agreements and franchising) will be a trend in the GCC, particularly in the UAE and Saudi Arabia.

Mekouar concluded: “Overall, we share a positive outlook for the Middle East’s hospitality industry in 2018, with strong market fundamentals in place and attractive investment opportunities on the horizon, especially with regards to the mid-segment hotels. In a marketplace where tourists are increasingly seeking more meaningful travel experiences, there is scope to create additional demand by offering innovative services. We also expect to see countries such as Saudi Arabia, Bahrain, and Oman, benefit from national infrastructure programmes and specialised hospitality offerings.”


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