The United Kingdom-based budget hotel chain, Premier Inn, plans to open 80 hotels in the Middle East by 2016, with investment between Dh6.4 billion and Dh8bn, according to a senior executive.
The Whitbread-owned hotel chain has an exclusive tie-up with Emirates Group’s hospitality division Emirates Hotels & Resorts to develop the Premier Inn brand in the GCC countries.
“It is a 50:50 joint venture. This means Emirates would be investing half the amount and we would be investing the other half. Each property would command investment between Dh80 million and Dh100m,” Darroch Crawford, managing director of PTI (Premier Travel Inn) Gulf Hotels (Premier Inn), told Emirates Business.
Of the 80 hotels the company plans to open in the GCC countries, 16 would be in the UAE alone, of which half would be in Dubai, according to Crawford.
With the first 300-room property scheduled to open on March 30 in Dubai Investments Park, the plan is to open 16 Premier Inn hotels of the 80 properties planned, in the UAE alone.
“Half of those hotels would be in Dubai. Also, we will open at least five Premier Inn hotels in the UAE in 2009. These would be spread across Dubai, Abu Dhabi, Ras Al Khaimah and Fujairah,” said Crawford.
While the second Premier Inn property in Dubai would be located in Dubai Silicon Oasis, the third one is being planned around the Dubai International Airport, according to Crawford.
Meanwhile, with the first Premier Inn commanding a standard per-night room rate of Dh450 the whole year round, Crawford warned of the escalating construction charges in Dubai.
“Our construction costs have gone up by 20 per cent in a year. And that is what will inevitably drive the room rates up,” he said.
He added that the room rate would also depend on the location.
Citing an example, Crawford said if the hotel were to open around the Dubai International Airport area today, the room rate would be about Dh550.
Premier Inn, which currently owns and operates more than 500 hotels with nearly 36,000 rooms in the United Kingdom and Ireland, will be directly competing with budget hotel brands such as Express by Holiday Inn and Accor Hospitality’s Ibis in Dubai, according to Crawford.
“What differentiates Premier Inn hotels from the competition is our ‘value’ hotel model, of bringing a four-star product to the market at a two-star price,” he pointed out.
Hotel Sector Share
Of the 40,000 hotel rooms that Dubai boasts today, merely one per cent is accounted for by the budget or the economy brand of hotels.
“But in another three to four years, this sector would command a good 10 per cent share of Dubai’s hotel sector. And Premier Inn would get half of that share,” Darroch Crawford said.
He said in the United States hotel sector, budget hotels account for 30 per cent of the market, while in the United Kingdom they make up 20 per cent of the market.