Do we need a hotel, an apartment, or both?

What makes an egg an egg? It is oval, white, and delicious, when cooked of course. What makes an orange an orange? It is round, orange, and full of vitamin C. What makes a hotel apartment a hotel apartment? It is a combination of a hotel room and an apartment; well it is a bit more complicated than that. Apartment hotels are apartments with hotel services that are commonly used for short term accommodation with facilities that are absent from hotel rooms such as kitchen, dishwasher, living room, and even a balcony. In the following lines I will be talking about different parts that play into the hotel apartment market in our region, so get your eggs and oranges ready because you will need them.

Hotel operators have been operating hotel apartments in the Region for a while now with many properties that were introduced not too long ago. Dubai is a major hotel apartment location in the region with a 149 hotel apartment properties recorded in March of 2008. The hotel apartment industry in Dubai has shown impressive occupancy rates and room rates along with the financial boom in the past few years. By the end of 2007, Dubai Tourism Authority registered 10,000 hotel apartments in Dubai only with an average occupancy rate of 82%. The concept has been spreading in the neighboring GCC countries such as Doha, Bahrain, Saudi Arabia, and Oman.

Due to the fact that Kuwait is mostly a business destination, business travelers tend to prefer hotel apartments to the hotel rooms. The preference came from the fact that business travelers are looking for a place that has the basic living functions they find at home and with a reasonable price. Moreover, GCC travelers are also huge fans of such concept mainly because of the kitchen. Many Arab families prefer preparing some of their meals in house during trips which hotel apartments offer. Also not being a brand and having the less sophisticated environment made the local family travelers feel more relaxed when using the hotel apartment facilities. Our Kuwaiti market is not strange to the hotel apartment concept where only local developments exist around the city. This concept has just been noticed by hotel developers such as Bukhamseen Holding Group. The Group is planning two Staybridge hotel concepts in Salmiya and Al Farwaniya by 2010. I believe branded hotel apartments can draw business and GCC family travelers if they were positioned and located correctly in the market.

Kuwait lacks the tourism attraction but it has the financial attractions. Major investment and development firms require foreign professionals to come and provide services in the country who will mostly occupy the apartments. Moreover, Kuwait has shown strong Islamic financial industry which can also play a role in attracting business travelers to the market. Having a branded hotel apartment industry can play a role in targeting a niche market that barely exists for international operators. Finally, in order for developers to generate immediate income, they can purchase existing apartment buildings that are strategically positioned around the city and convert them to hotel apartments.

By Ali Boshehry

Ali Boshehry has an extensive experience in dealing with financial data in many different fields that enabled him to be a dynamic part of the Global Markets Monitor team.