GCC tourism growth drives serviced apartment market

Tell us about your presence in this region. What is the Universal Selling Proposition of your brands?

Ascott limited is the world’s largest international serviced residence owner-operator and offers the flexibility of three award-winning brands – Ascott The Residence, Somerset Serviced Residence and Citadines Apart’hotel. Each residence brand has its unique personality and is designed to connect with a specific customer segment. However, they all share specific brand values from LIFE (local touch, individuality, feeling at home and exceeding expectations).

Prestigious and pampering, Ascott The Residence lavishes business travelers with discreet service in plush refinement, and offers a mix of business with pleasure. When it comes to personalised conveniences for savvy and vibrant individuals on the go, nothing comes close to Citadines Apart’hotel.

Somerset Serviced Residence welcomes guests with homely warmth and enriches their elegant lifestyle with local experiences. They can feel the pulse of major cities, the communal chic in elite estates, or get away from it all in private tranquility. Globally we find clear indicators of company-wide USPs,  which are identified through our guest feedback and our return guest ratios.

 

What attracted you to the Qatari market? Could you tell us more about your business model and the company’s involvement here?

Somerset Al Farteh Bahrain managed by Ascott Limited is owned by Nuzul Holdings and this partnership also created the entry into the Qatar market.  Nuzul Holdings in a joint venture with Barwa (the largest listed real estate company in Qatar today) built Somerset West Bay Doha.  Our entry into the market came just after the Asian Games in 2006.

Today our partnership and owner in Somerset West Bay Doha is Katara Hospitality, the hospitality owner, manager and developer, aiming to become one of the leading hospitality organisations in the world. Ascott Doha, located in the diplomatic area of Doha, was opened by Ascott in 2010 and has complemented Somerset West Bay Doha in the West Bay area.

 

How many properties do you own?

Ascott’s portfolio spans 94 cities across 26 countries, 25 of which are new cities in Ascott’s portfolio where its serviced residences are being developed. With over 26,000 operating serviced residence units in key cities of the Americas, Asia Pacific, Europe and the Gulf region, as well as about 15,000 units which are under development, making a total of more than 42,000 units in over 250 properties.

 

What is your assessment of the growth prospect of the serviced apartment segment in this part of the world?

The rise of the hotel/serviced apartment sector across the GCC continues to get stronger with both consumers and investors.

We see some major areas generating growth and demand: tourism, leisure travel, international sport events and exhibitions, mega infrastructure projects, population growth and investment.

The Middle East performed well in 2014 with the contribution of travel and tourism to the gross domestic product recorded at a 5.3 percent increase above what was forecasted at the end of 2013. The contribution powered by leisure and business tourism and leisure tourism accounted for over 80 percent of the annual spend.

Tourism arrivals continue to increase across many of the GCC countries with Doha, Dubai and Abu Dhabi now major transit hubs to other destinations and Dubai is proving to be a fully-fledged holiday destination. In 2014, the average length of stay was 7.8 days, higher than London and similar to New York City at 7.6 days. The serviced apartment market is reaping the rewards of this growth through a diverse mix of motives such as space, in-room facilities, personalised service and security.

According to the Deloitte GCC Powers of Construction report, a key driver in diversification – for example, from oil-based economies – is job creation.  Population growth is forecast to grow from 350 million to 602 million by 2050, driving the GCC countries’ strategies which include education, transport, tourism, manufacturing, logistics, finance and information communication technology.

The population growth driven by the diversification strategies, in particular the mega infrastructure projects are strengthening the demand for longer-term accommodation. The hotel apartment sector is benefiting from an increased influx of expatriates working on longer-term assignments, requiring accommodation for up to a year.  Security and international standards of accommodation and service are key drivers to the increased demand of hotel apartments across many GCC countries.

 

Considering the fact that both Qatar and Dubai are slated to host two major global events, how is it going to impact the hospitality industry, and more specifically, the serviced apartment segment?

In the last decade tourism has been one of the fastest growing industries in the world, according to the World Travel and Tourism Council. In 2012 the industry was responsible for 8.7 percent of total employment and contributed 9.3 percent to the global economy.

In line with diversification strategies from non-oil based economies, many GCC countries, Qatar and Dubai among them, have implemented long-term tourism strategies.   Part of these strategies is to attract global mega events, such as 2022 World Cup and Expo 2020.  Events such as this allow the host country to develop and transform its infrastructure, not only to handle the enormous influx of visitors, but to create a lasting legacy for the future. 

A flow-on effect impacting the hospitality sector from the increased number of infrastructure projects is growth in business tourism.  Expatriates working on these projects results in transient and longer-term accommodation requirements.   This often translates to population growth, in turn growing the economy.

A niche market within business tourism for serviced apartments is the one- to 12-month corporate traveller, working on a project or assignment in a new city.  Offering all the services of a hotel and the space and furnishings of a residential apartment, gives the guests the security and comfort they need conveniently and more cost effectively than furnishing a residential apartment for a limited time.   

Another impact of increased leisure visitors specific to the serviced apartment market, is the growing family travel market.  Family travel is the fastest growing segment globally, according to Thomas Reuters, accounting for over 12.5 percent of the global tourism market.

Muslim travellers constitute a major segment of the global tourism traffic and notably, Middle East and North Africa (MENA) states account for seven of the top 10 family tourism friendly destinations among the Organisation of Islamic Cooperation  nations.