Refurbishing Hotels in the Middle East

Jason Tucker
With Expo 2020 and FIFA 2022 on the horizon, owners of existing hotel stock are under pressure to compete with new provision.

The Middle East has marketed itself as a luxury destination with a wealth of international upmarket hotel brands. The city is now moving towards destination maturity, attracting a diversified visitor profile and an enhanced product offering including largescale theme parks.

The upmarket hotel segment has dominated the Middle East hotel landscape thus far, but diversification is under way with increased interest in new mid-range products. The 2017 Arabian Hotel Investment Conference 2017 (AHIC) identified the mid-market as a major investment opportunity.

These new offerings are needed for growing domestic markets, as well as to widen the appeal for international tourists and business visitors. Medical and religious tourism are creating a need for more price-conscious accommodation throughout the Middle East, alongside major events such as the 2022 FIFA World Cup in Doha and Expo 2020 in Dubai.

Owners of existing hotel stock are therefore under pressure to compete with new and upcoming provision. Typically there is a seven- to ten-year cycle of refurbishment, with renovation, refurbishment and/or retrofitting are needed to optimise value, maintain a competitive market position, reflect brand development or modernise the facility. Technology updates may be necessary, or upgrades to comply with building codes, fire regulations, disability and other regulatory/legislative requirements.

There are many considerations for owners and operators as they seek to protect and enhance the guest experience, and ultimately seek repeat business. Guest feedback is now readily visible to all, highlighting any disappointments or defects and impacting hotel reputations. Building works will inevitably affect guests and careful scheduling is therefore required to develop an acceptable and achievable programme.

Faithful+Gould leads many complex hotel refurbishment projects, developing specific project management solutions in response to our clients’ challenges.

Faithful+Gould leads many complex hotel refurbishment projects, developing specific project management solutions in response to our clients’ challenges. It’s essential to explore the options with both operator and owner, to reach a collaborative decision on the best way forward. We can add significant value to this scoping process as we understand the potentially conflicting goals and sensitivities, and can help resolve these before the project is launched.

The decision on whether to keep the hotel open needs thorough exploration. Operators are understandably reluctant to decommission rooms, food & beverage or leisure, due to loss of revenue. Revenue modelling, comparing open versus closed, will give a clear view of the potential outcomes, including the costs relating to contracted staff and retail units during a period of closure. The ‘remain open’ statistics will compare the revenue impacts of different room outage scenarios – the revenue loss associated with refurbishing 40 rooms in each phase, compared to 30 for example.

In most cases, because there is no substantial off-peak season in Dubai, refurbishments have to be managed in phases within a live hotel environment. Where the hotel is to be closed, this will usually be in the summer months.

Remaining open gives rise to a range of concerns, including segregation of guests and construction zones, food & beverage availability, access/egress arrangements for guests, hotel staff and contractors, and protection of guests from the work zones (including physical safety, noise, visual disruption and works pollution).

We have developed proven strategies for managing construction projects in this live hotel environment. Early engagement with all stakeholders is key, to achieve a mutual understanding of the strategic and operational pressures. Surveying the project and understanding the building conditions will enable development of the most suitable design (little may be known about the building at the outset). The design itself should take account of the need to deliver in a live environment.

Good programming and budgeting aims to avoid over-run and over-spend. It’s vital that projects are delivered on time.

The guest experience should remain at the heart of the project logistics, to minimise the effect of the ongoing works. The phasing strategy must ensure that sufficient food & beverage provision is available, together with sufficient access to leisure facilities, for the number of guests remaining in residence. Keeping the lobby open is likely to be a priority.

Good programming and budgeting aims to avoid over-run and over-spend. It’s vital that projects are delivered on time, as travel agents need six to 12 months’ notice of room availability, for maximum sales. Contractors with good hospitality capability should be selected, and the project split into works packages as part of the risk management strategy.

The close-out strategy should be agreed early, with a clear understanding of room functionality at handover. The aim is minimal snagging, as room access is difficult after handover. Inevitably there are challenges, but with careful planning and expert project management, it’s possible to complete a refurbishment with minimal effect on hotel guests.

Faithful+Gould has partnered with some of the Middle East’s most well-known hospitality and leisure clients. We have worked on some of the region’s most prestigious hospitality and leisure projects, from initial concept through to completion, operation and subsequent refurbishment.

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