KPMG 2016-2017 international
case competition
Developing and Applying Expertise to Dubais
UpscaleHospitality Industry
Understanding the Luxury Hotel Industry and Leading
Jumeirah Group in the Dubai Market
Brian Ballou
Dan Heitger
Professors of Accountancy
Co-Directors, Center for Business Excellence
Miami University
Oxford, Ohio, USA
Case Context
An international professional accounting
services firm creates value for clients by
offering insightful accounting and advisory
services on a myriad of issues. One of the most
important, yet challenging, advisory services
involves understanding, evaluating, and offering
suggestions regarding a clients strategy and
implementation. Successfully providing high-level
strategic assessments often triggers considerable
opportunities for additional advisory and other
services. This case focuses on the luxury hotel
industry and one of the market leaders based in
Dubaithe Jumeirah Group (hereafter Jumeirah
or the Company). Included is a description of
the global luxury hotel industry, emphasizing
strategies for serving customers, and how
Jumeirahs culture best enables it to meet
customers needs in the Dubai and the global
luxury hotel segment.
The case places you in an advisory role within an
international accounting firm interested in growing
its client services in Dubais luxury hotel industry
with Jumeirah as one of its most desired clients.
Your teams charge is to understand and
assess Jumeirahs vision, strategy, and
corporate culture and offer suggestions for
how Jumeirah should move forward to
successfully grow its presence in Dubai and
the global luxury hotel market.
An Overview of the Luxury Hotel
Industry
The hotel industry overall is classified into six
segments: economy, midscale, upper-midscale,
upscale, upper-upscale, and luxury (Travel &
Tourism Market Research Handbook, 2013). This
case focuses solely on the luxury segment, which
is further subdivided into upper upscale, luxury
major, and luxury exclusive (World Luxury Index
2014). One way to assess performance in the
hotel industry is to measure online search traffic,
which is very highly correlated with the actual
number of rooms sold (i.e., demand).
According to renowned hotelier Jeff Klein
in his January 2008 blog (For the Moment:
TheDefinition of Luxury, T: The New York Times
Style Magazine), luxury for a hotel service
provider has different meanings to different
people, but it generally is thought of as making
customers feel like they are the only people in
the room by attending to their specific needs.
Basically, luxury means customization, which can
be illustrated as follows: Some customers really
enjoy having the matre d remembering their
favorite table or bringing them their favorite drink
when they sit down; others appreciate the valet
remembering their name from their previous visit;
and others value having chambermaids remember
to avoid placing a sweet on their pillow for room
turndown service because they are on a diet.
 Upper Upscale Luxury Major Luxury Exclusive
Camino Real Nikko Andaz Sofitel Affinia Mandarin
Hotel Okura Hotel Bulgari Hotels St. Regis African Pride Oriental
Dusit Thani Omni Hotel Conrad W Hotel Hotel Oberoi
Embassy Suites Pan Pacific Fairmont Waldorf Astoria Anantara One & Only
Gaylord Hotel Pullman Hotel Gran Melia Angsana Orient-Express
Hilton Banyan Tree Hotel
Radisson Blu Grand Hyatt
Hotel du Vin Hotel Four Seasons Peninsula
Hotel Missoni
Hyatt Renaissance Guoman Regalia Hotel
InterContinental
Joie De Vivre Sheraton Hospes Regent
JW Marriott
Kimpton Steigenberger Impiana Hotel RockResorts
ME hotel
Le Mridien Swissotel Jumeirah Rosewood
Park Hyatt
Mgallery Vivanta by Taj Kempinski Shangri-La
Raffles
Millennium Westin Langham Six Senses
Ritz-Carlton
Hotel Wyndham Loews Taj Hotel
Royal Tulip
Lotus Resort The Leela

Source: World Luxury Index 2014 (Digital Luxury Group, SA; intelligence@digital-luxury.com)

To differentiate across luxury segments, Dubais
Ritz-Carlton is considered luxury major and its room
rates on a typical April evening are AED 1,387 (US
$378) to AED 4,900 (US $1,334), whereas Dubais Burj
Al Arab Jumeirah is considered luxury exclusive and
its room rates on the same April evening are AED5,905
(US$1,594) to AED35,444 (US$9,580). The case
includes descriptions of what Jumeirah offers to justify
this pricing in the section describing the hotel and its
strategy and culture below.

SEARCH VS. NUMBER OF ROOMS SOLD.

(DEC 2012 - JUL 2014)

Correlation - search vs demand

+100%

+80%
Evolution of rooms sold (STR)

+60%

+40%

+20%

0%
-60% -40% -20% 0% +20% +40% +60% +80% +100%
-20%

-40% y = 0,7672x - 0,0217

R2 = 0,542
-60%
Evolution of online search volume (DLG)

Source: World Luxury Index 2014 (Digital Luxury Group, SA; intelligence@digital-luxury.com)
This measure typically is referred to as the degree to
which a given hotel is sought after (World Luxury
Index 2014). The following chart illustrates both the
current size and year-over-year growth in the three
luxury hotel market categories. Using this measure,
Upper Upscale represents the largest market
share, accounting for 56 percent of luxury hotel
online searches, followed by Luxury Major
(25 percent) and Luxury Exclusive (19 percent).
While all three categories of the luxury market
experienced increased interest, the Luxury
Exclusive category enjoyed the greatest
year-over-year growth at 9.6 percent.

Most Sought-After Hotel Categories

(By Number Of Searches)

Luxury Major
25%

+5.9% Y/Y

Upper
Upscale
56%

+7.9% Y/Y Luxury Exclusive

19%

+9.6% Y/Y

Source: World Luxury Index 2014 (Digital Luxury Group, SA; intelligence@digital-luxury.com)

In addition, as shown in the following graph, while currently dominates the absolute luxury hotel market,
increasing generally, the demand for luxury hotels but the year-over-year increase in demand in places
in specific geographic regions varies considerably such as United Arab Emirates is considerably higher
across the globe. For instance, the United States than in the United States.

Consumer interest origin and evolution of interest

#2 United Kingdom: =
#4 Germany: -9%
#1 United States: +7% #3 China: +39%
10%
4% #5 India: +12% #6 Japan: +2%
2%
2%
58% #8 France: -1% 9%
2%
3% 1%

2% #10 Thailand: -5%

#9 United Arab Emirates: +16%
#7 Singapore: +9%

Bubble size: % of total interest for luxury hotels that originates from the country
Yearly evolutions: July 2013 June 2014 vs July 201 June 2013.
Additionally, according to Travel + Leisure (2015), the
top hotel luxury brands globally are as follows:
Name
1. Oberoi Hotels & Resorts
2. Aman
3. The Peninsula Hotels
4. Rosewood Hotels & Resorts
5. Four Seasons Hotels & Resorts
6. St. Regis
7. Auberge Resorts Collection
8. Belmond
5. Adhering to customer recommendations Utilize
social media and other mechanisms to boost
online reputation management metrics and to
Score maximize revenue based on customer satisfaction
ratings.
97.50 6. Working with more competitive bidding for
meetings and businesses Follow the trends
94.00
in the gaming industry to use more science and
analytics to help set prices.
93.23
7. Ever-changing and dynamic revenue management
93.15 Hire and retain top talent in an environment with
a shortage of hotel management expertise.
92.43
Ownership Models for the Luxury Hotel Industry
92.36
Full ownership This type of ownership warrants
huge capital allocation and the owner undertakes
92.14
higher risk. It allows the owner full control over
91.16 pricing, operating expenses, and business decisions.

Management contract Individuals called

9. Mandarin Oriental Hotel Group 91.14
10. The Ritz-Carlton Hotel Company 90.15
Emerging Trends that are Shaping the Global
Luxury Hotel Marketplace
According to their Q1 2014 issue, the International
Luxury Hotel Association notes the following seven
trends in the luxury hotel industry:
1. Growing focus on boutique or lifestyle hotels
Provide customers a personalized experience with
unique ambiance that creates deep emotional
creativity with customers.
2. Increasing emphasis on guest engagement
Know your customers perspectives and wants
in order to more successfully personalize their
experience.
3. Reacting to a consumer-empowered environment
Strengthen brand within an environment with
greater price transparency, lower barriers to
entry for competitors, including substitutes, and
industry-disruptive ideas.
4. Providing guests total value Use holistic pricing
and forecasting methodologies to help make
decisions that maximize total guest value (e.g.,
room revenue, gaming revenue, food/beverage/
spa revenue, etc.).
operators run the hotel and receive remuneration
directly from the owner as a percentage of sales
(2percent-3percent), along with incentive payments
(8 percent-9 percent of operating profit). This is also
referred to in the industry as an Asset Light Strategy.
Franchise Franchisors license their brands, allowing
the hotel owner to use the brand and reserve
rooms. Franchisee must comply with the franchisor
standards, pay an initiation fee, and ongoing royalties
(percentage of room sales).
Lease and license Owner of the property leases it
for a finite time period. The lease rental is deducted
from gross revenue and a penalty is assessed if they
fail to comply with the agreement.
One strategy luxury hotels have taken to expand
their global brand presence is to enter into
management contracts to operate hotels owned by
other companies under their hotels brand name.
Forexample, Hilton Hotels & Resorts has entered
into several agreements to operate well-known
luxury hotels under its luxury Waldorf Astoria brand.
One example is a management contract it entered
with the famed Biltmore Hotel in the United States,
which is now operated as the Arizona Biltmore, A
Waldorf Astoria Resort. This strategy can be effective
for growing the brand but requires a company like
Hilton to understand the market in which it operates
such that its brand will be recognized and add value
to the overall company.

Jumeirah Vision, Strategy, Culture, and
Positioning within Dubai Market
Jumeirah transparently describes on its Web site
that the company was founded in 1997 with the
aim to become a hospitality industry leader through
establishing a world-class portfolio of luxury hotels
and resorts. Jumeirah hotels and resorts are
regarded as among the most luxurious and innovative
in the world and have won numerous international
travel and tourism awards.
Jumeirah owns 6 foundation assets in Dubai while
their other 16 properties are management contracts
with third party owners using the asset light strategy
noted above. Their growth strategy includes areas
of geographic focus such as the Middle East, Africa,
Asia Pacific and, on an opportunistic basis, Europe.
Jumeirah currently operates two leases in Europe
but no longer includes this model in their future
expansion strategy. In addition, they have launched a
new brand Venu targeted at the 4-star range.
Venu is designed to appeal to the modern traveler
whose expectations revolve around their own
lifestyle clean, contemporary, cool and effortless.
This is also an integral part of their global growth
strategy.
Jumeirah uses the following vision to serve as its
value proposition for the market:
To be a world-class luxury international
hotel and hospitality management company,
committed to being the industry leader in
all of our activities through dedication to
our stakeholders, colleagues, customers,
business partners, and owners.
Jumeirah believes that its guiding principles create its
culture that differentiates the Company from others
in Dubais upscale hospitality industry:
Integrity We act with honesty and sincerity in
everything we do. We say what we mean, do what
we say, and build confidence in our team.
Teamwork We work toward common goals
through open communication, mutual support, and
win-win attitudes. We respect our differences and
build upon our strengths.
Recognition We ensure that peoples individual
needs and successes are supported and recognized.
Innovation We are open minded, challenging
conventional thinking, improving our processes
and implementing new ideas faster than our
competitors.
Continuous Growth We provide an environment
where our colleagues and our business can flourish
and grow.
People Focus We focus on our colleagues,
customers and business associates and they
acknowledge us as preferred partners.
Jumeirah believes that its Hallmarks serve as a credo
or service philosophy for its employees to follow:
I will always smile and greet our guests before
they greet me.
My first response to a guest request will never be no.
I will treat all colleagues with respect and integrity.
To further demonstrate its commitment to integrity
and excellence, Jumeirah follows its Business
Excellence Policy (also known as their Customer
Strategy in hotel operations viewed internally as a
philosophy of how they do business):
Our dedication to excellence and continuous
improvement is demonstrated through our
commitment of resources to innovation and
learning. Through our Business Management
System, we deliver benefits to our customer,
colleagues, business partners, owners and
society by listening, building loyalty and
developing mutually beneficial relationships.
Jumeirahs strategy has been to serve its key
stakeholders (by consistently following its Guiding
Principles, Hallmarks, and Business Excellence Policy
to achieve its vision), which they explicitly express as:
Making customers our first priority and striving
constantly to exceed their expectations by applying
our Hallmarks, Guiding Principles and Core
Standards in our day-to-day activities.
Leading by example and role-modeling a culture
of excellence in everything we do by providing
consistently superior and innovative products and
services.
The Company intertwines its culture with the rise
of Dubais luxury economy and Arabian hospitality.
Jumeirah believes that it fosters the tradition of
welcoming guests better than other hotel chains.
Jumeirahs standards of service are so high that
it claims to drive Dubais reputation of excellence
as perceived by visitors. Further, the Company is
expanding to bring such excellence to people all
over the world. Further, Jumeirah argues that it
is the reason that Dubai is considered a leader in
imaginative and exhilarating experiences, pushing the
boundaries of what visitors expect.
Further it emphasizes its Brand Promise of STAY
DIFFERENT based on three Brand Pillars:
Deliver Imaginative and Exhilarating experiences
Jumeirah aims to create unforgettable moments,
whether it is a once-in-a-lifetime occasion or just an
unexpected little detail. The Company believes that
every visit is an opportunity to inspire and excite.
Jumeirah provides these examples:
Burj Al Arab Jumeirah Adventurous guests can
get married on the helipad with breathtaking views
of Dubai.
Madinat Jumeirah Guests can explore
3 kilometers of waterways with surprises around
every turn.
Jumeirah Frankfurt Forty thousand bees on
the rooftop provide honey for guests to enjoy
throughout their stay.
Provide Culturally Connected environments
Jumeirah embraces the cultures where it is located,
bringing the regions richness, heritage, and style to
its hotels. Jumeirah provides these examples:
Pera Palace Hotel Jumeirah The guest arrival
experience is enhanced with a trip in Turkeys first
elevator, which is over 120 years old.
Jumeirah Dhevanafushi Guests are welcomed by
the sound of traditional drums and singing, the art
of Bodu Beru.
Jumeirah Himalayas Hotel Guests enjoy incense
and tea ceremonies showcasing traditional Chinese
art forms in the culturally inspired hotel lobby.
Offer Thoughtful and Generous service Jumeirahs
employee base consists of over 110 different
nationalities, all with one shared goal: to make the
customer experience wonderfully different. Jumeirah
provides these examples:
Burj Al Arab Jumeirah Has an average staff to
suite ratio of 8:1,
Jumeirah Creekside Hotel Guests have access to
a complimentary selection of amenities offered via
a trolley passing by their room.
Jumeirah Carlton Tower Guests are granted
access to private and picturesque gardens in
Central London.
Burj Al Arab Jumeirahs Flagship Hotel
Jumeirah believes that the distinctive sail-shaped
silhouette of Burj Al Arab Jumeirah is more than just
a stunning hotel, it is a symbol of Dubai. Beyond the
stunning structure, Jumeirah believes that its service
within the hotel is what really makes the Burj Al Arab
so extraordinary. When the hotel opened in 1999,
a journalist dubbed it the worlds first 7 star hotel;
it is repeatedly voted the worlds most luxurious
hotel. In fact, Burj Al Arab is frequently listed as
Dubais top tourist attraction. It describes that this
magnificent destination offers the finest service
and facilities throughout right down to an optional
chauffeur-driven Rolls-Royce. Further, Burj Al Arabs
suite-only accommodation offers discreet check-in
within rooms, a private reception on every floor and a
host of personal butlers, each a warm messenger of
unparalleled hospitality.
Travel Channel rated the Burj Al Arab the top luxury
hotel in Dubai in 2015 (www.travelchannel.com).
It describes the hotel as follows:
The Burj Al Arab is a knockout from first
glance with an unusual design that is built
to look like a giant billowing sail reaching
over 1,000 feet into the air. Come sundown,
the hotels exterior is aglow with a light
show that moves across the sail-shaped
structures. The hotels interior is equally
impressive with luxurious two-floor suites.
The Royal Suite is the most opulent, and
features a towering four-poster canopy bed
on a rotating pedestal and a staircase built
from marble and gold. Each floor of the
hotel has its own reception desk and team
of butlers ready to assist you with requests,
To access Jumeirah Inside, use the following link:
http://www.jumeirah.com/en/hotels-resorts/jumeirah-inside/
whether thats a chauffeured Rolls-Royce to
tour the town or reservations for a seafood
feast of Caspian caviar, Tasmanian salmon
with foie gras, and grilled Atlantic lobster at
the on-site restaurant Mahara.
To illustrate to potential guests what the Burj Al Arab
offers, Jumeirah collaborated with Google to launch
in November 2015, Jumeirah Inside, a virtual platform
comprising 360-degree video and photography that
also enables users to make hotel bookings. According
to Arabian Business (November 18, 2015), Jumeirah
said the online tool is a hotel industry first and offers
a fully immersive digital travel platform, which is
accessible through the Companys Web site. The
virtual journey begins at the worlds most luxurious
hotel, the Burj Al Arab, where guests can see,
hear and move around like never before. Users can
uncover new information and explore the vibrant
colors and playful water features in the atrium
through 360 video. Other experiences include the
chance to dive into the Talise Spa infinity pool, take a
leisurely stroll through the magnificent Royal Suite,
and explore Dubai from the exclusive helipad.
From there guests can continue their virtual journey
and explore Jumeirahs hotels and resorts around
the world. By clicking on 360 photo spheres,
which each have informative hotspots, users will
uncover Jumeirahs STAY DIFFERENT experiences
which can be used to inspire their friends through
Facebook, Twitter, Weibo, Wechat and Google Plus.
Optimized for mobile and tablet users, the site will
offer the opportunity to make hotel reservations at
any point. The fully immersive experience is available
in English, Arabic, German, Russian and Mandarin.
The Dubai Upscale Lodging Market
A Global Leader in Luxury Hotels
According to Gulf News TOURISM, in 2015, Dubai
was able to yield the third highest average room
rates globally. According to a 2015 ranking by the
Travel Channel (www.travelchannel.com) the top
five luxury hotels in the U.A.E. are:
Burj Al Arab (Jumeirah): See above.
Qasr Al Sarab Desert Resort by Anantara (Minor,
located in Abu Dhabi)):In the midst of the worlds
largest uninterrupted sand desert, the Qasr Al
Sarab is a like a dreamy, luxurious mirage providing
a palatial retreat in the Empty Quarter of the Liwa
Desert. Rooms are decked out in subdued earth
tones with intricate mosaics and jewel-encrusted
accessories. All rooms have views of the expansive
desert, but the Deluxe Terrace rooms have the
best, with wide terraces overlooking the sandy
dunes. Sample fine Middle Eastern foods at the
fourrestaurants, including the all-day buffets and
cooking stations at Al Waha. The free-form pool is a
welcome respite from the hot desert sun, as is the
spa where ancient elixirs get a modern update with a
floral foot bath, Thai herbal compress massage, or a
detoxifying green tea scrub.
Shangri-La Hotel (Shangri-La):In a city that strives
to be over-the-top, the Shangri-La offers first-class
luxury in a more restrained and very refined setting.
There are 302 guest rooms with deep soaking tubs,
rain showers, and warm dcor with sleek lines
and local artwork. The signature restaurant, Shang
Palace, serves high-end Cantonese specialties while
Marrakech serves contemporary Moroccan cuisine
in a bright and airy courtyard. Loungers circle the
curved swimming pool where guests can relax after
a game of squash or a workout in the fully equipped
fitness center. And the hotels location on the storied
Sheikh Zayed Road puts it right in the center of
Dubais action with shopping, entertainment, and
wild skyscrapers just a few blocks away.
Jumeirah Al Qasr (Jumeirah): Al Qasr translates to
the palace, and its posh, classical architecture and
ornate embellishments are designed to invoke the
feelings of an upscale sheikhs summer residence.
Al Qasr is part of the larger Madinat Jumeirah resort
complex with sprawling facilities and a gorgeous
stretch of sand at Jumeirah beach. There are 292
guest rooms decorated with classic Arabic flair
and private patios, many with perfect ocean views.
Hotel guests have full reign over the resort facilities,
including an impressive health club with a 25-meter
indoor lap pool, water sports on the beach, a
decadent spa and, for the youngest guests, Sinbads
Kids Club and water park fun at Wild Wadi.
Bab Al Shams (Meydan):Plan a romantic Arabian
getaway at the intimate Bab Al Shams, a desert
retreat just outside of Dubai. Even though there are
just 113 rooms, the hotel has all of the amenities of
a larger resort with 8 restaurants and bars, a stellar
spa, and 3 swimming pools. Rooms look out over the
vast desert or perfectly landscaped gardens, while
suites also boast private sun terraces. The signature
restaurant, Al Hadheerah, is an open-air dining
extravaganza that resembles a classic Arabic market
with a bevy of belly dancers, roaming henna artists,
live music, and even falcon displays. Put the perfect
end to your Arabian nights with a cocktail at the
rooftop Al Sarab lounge with spectacular desert views
and shisha, or hookah pipes, with a variety of flavors.
Impact of Global Economy on Dubais Luxury
Hotel Industry
One potential disrupting force in the economic
industry is the weakening global economy, especially
in key source markets such as Russia and Europe.
The global drop in oil prices in early 2016 is also
a cause for concern. According to the Economic
Intelligence Unit in January 2016, the sluggish oil
economy could negatively impact tourism into
the region during the upcoming year. To show the
correlation between oil prices and the hotel industry,
below is a chart comparing the stock price for
upscale and luxury hotelier Starwood (which, at the
time of writing this case, is in an acquisition battle
between Marriott International and Anbang of China)
with global oil prices on a per-barrel basis.
80
70
60
Actual Share
Price
50
Jan 2000 to 40
November 30
2014
20
10
0 10 20 30 40 50 60 70 80
Model of Starwood Monthly
Average Share Price (HOT) with
{S&P 500} and {Oil-Price} as
Explanatory Variables
Source: The Market Oracle, December 2014
While the weakening economy is expected to negatively impact the general lodging
industry in Dubai, where supply is outpacing demand, the luxury market expects to
remain strong. For example, Gerald Lawless, former president and chief executive
officer of Jumeirah, noted that occupancy of the Companys Dubai properties stood at
79percent for 2015 and believed that, the hotel industry is in a very robust state and we
expect that our (key performance indicators) will continue to rise in 2016. Lawlessalso
noted that, additional supply of hotels in Dubai will encourage more guests to visit the
Emirates, coupled with increased airlift from Emirates and Flydubai (as cited in Gulf News
TOURISM, www.gulfnews.com, September 2015). However, there has not been the
expected rise in key performance indicators as of yet in 2016.

The Impact of Seasonality on Dubais Luxury Hotel Market

Given the location of Dubai in a dry, desert climate, temperatures vary throughout the year,
with summer months from May through September averaging temperatures at or above
100 degrees Fahrenheit. As shown by the two charts below, the percent of Dubais gross
domestic product (GDP) determined by restaurants and hotels correlates with quarterly
temperatures.

Average Daily High/Low Temperatures in Dubai

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

High
23 24 27 32 37 38 40 41 38 35 31 26
C
High
73 75 81 90 99 100 101 106 100 95 88 79
F
Low
14 15 17 20 24 26 29 29 30 23 19 16
C
Low
57 59 63 68 75 79 84 86 81 73 66 61
F
Source: http://www.holiday-weather.com/dubai/averages/

Hospitality Sector (Restaurants and Hotels) as a Percentage of GDP

5.5 %GDP 5.4 5.4 5.4

5.0 5.0 5.0

5.0 4.9

4.6
4.5
4.5
4.3
4.1 4.1
4.0 3.9

3.5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2011 2012 2013 2014
Source: Dubai Statistics center (DSC), Emirates NBD Research
According to the 2015 Dubai Hospitality Report
(www.knightfrank.com), sites for prime hospitality
assets are becoming scarcer, Dubai is seeing a shift
toward the development of midscale and upper-
midscale properties, underpinned by government
incentives, a growing middle class in key source
markets, and the rise of a younger, more cash-
constrained guest profile. The advantages of
developing midscale and upper-midscale hotels
generally revolve around the notions of price stability
and less volatile demand trends, which have proven
to hold true at the local level.
The hospitality market lifecycle
Development of branded
budget hotels typically
in tertiary locations and
along major travel routes
United States
the demand for hotels in operation, it suggests that
luxury hotel companies should consider expanding
to other luxury markets outside of Dubai (which
has been a key part of Jumeirahs growth strategy)
or develop new brands targeted to the midscale or
upper-midscale consumer base.
According to a July 2015 Arabian Business article,
a new report has revealed that Dubai is seeing a
significant shift away from luxury hotels to midscale
properties with almost 50 percent of new rooms to
open in 2015 as having a three-star or lower rating.
The study published by Jones Lang LaSalle (JLL) for
The Hotel Show Dubai 2015 shows that 44 percent of
the 3,600 new hotel rooms to enter the Dubai market
in the final months of 2015 are midscale. Its report
showed that the near-saturated luxury market is set
to be rivaled by a supply of lower-graded properties

Mature with more competitive room rates, 44 percent of

Branded supply well which are forecast to be graded 3-star or less and a
represented in the total 69 percent at 4-star or less. However, the high
market accounting for the land cost in Dubai acts as a barrier to entry for private
majority of supply developers trying to enter the midscale and budget
Development of branded markets. The large developers with land banks do not
mid-market hotels and have this same challenge.
Dubai

Emergent serviced apartments.

During Q1 of 2015, the hospitality market in Dubai
International operators
exhibited strong performance in relation to other
well represended with
the exception of the
major markets in the Middle East, despite a dip in
budget sector key performance indicators, which were primarily
Riyadh

attributable to global currency fluctuations and

High influx of
a declining Russian market. During this time,
internationally branded
occupancy levels fell by 1.5 percent while average
Developing luxury and upper upscale
hotels daily rates fell by 12.6 percent to AED588 in annual
terms. Although this resulted in a year-on-year
Oman

Market bifurcated
revenue per available room (RevPAR) decrease of
between internationally
branded luxury hotels,
7percent, Dubai remains among the leading markets
and low quality stand- in the Middle East both in terms of average rate and
occupancy.
Mozambique

alone properties
Market primary While the hotel industry in Dubai is far more
Infancy characterized by local developed than other Middle Eastern destinations,
stand alone development it still has some ground to cover before it can be
with no consistency
considered a fully mature market. The current push
in terms of product or
service offering
toward mid-market development will reinforce
Dubais standing as an emergent hotel market
Little to no international through the provision of a more diverse product
brand penetration
offering. As internationally branded midscale hotels
Source: Knight Frank Research
increasingly grow in market, the next asset class to
see rapid growth will likely be the economy sector.
As the exhibit above shows, this shift from luxury
to midscale and upper-midscale hotels follows the
path of a hotel market life cycle as it shifts from
infancy to maturity. While this trend does not lessen

kpmg.com/socialmedia
2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
Printed in the U.S.A. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
NDPPS392796