Luxury versus budget is a long-running debate among hotel investors. What provides higher and quicker return on investment - a five-star or a mid-market hotel?

Looking at the market conditions and demand in Dubai, the answer seems clear, says Laurent A Voivenel, CEO, Hospitality Management Holdings (HMH).

"Budget hotels are the most profitable long-term investment. And now is the time to build these in Dubai. The market is ripe and is in urgent need of more budget rooms if it is to diversify its segments, attract the growing middle class travellers from emerging economies of Asia and Africa as well as cater to Dubai Expo 2020 visitors. It is an unprecedented opportunity that investors can capitalise on," he said.

There is a near saturation in the market when it comes to luxury hotels.  The market does not need any more luxury hotels at this point. Over supply of rooms in this segment is putting a tremendous pressure on rates that in turn is affecting ROI. However, the same is not the case with mid-market hotels. Given the demand, investors can expect double digit ROI (10 to 12 per cent every year) with the right product and the right location, he said.

Founded in 2003 in Dubai, HMH is a fully-integrated hotel management company that prides itself on being the first hotel chain in the Middle East to offer alcohol-free safe environment. It provides hotel owners and developers a broad spectrum of comprehensive management solutions with five distinct, yet complementary, hotel brands catering to varied market segments from budget to luxury. These include The Ajman Palace Hotel, Coral Hotels & Resorts, Corp Hotels, EWA Hotel Apartments and ECOS Hotels.

Laurent stressed that HMH offers far better value and returns to hotel owners and investors with the right blend of expertise, strategy, technology and market reach. "Having the strongest management infrastructure in place, we are able to respond swiftly to any market dynamics and challenges," he said.

Laurent added: "Technology plays a key role today in the success of any business and more so in our industry. One of our greatest strengths at HMH is the adoption and integration of latest technology into every aspect of our business from management to operation. We have invested heavily into technology that places us at par with top international brands and enables us to optimize our performance to deliver superior results.” - TradeArabia News Service