Global hotel investment is reaching record levels, with recent Jones Lang LaSalle (JLL) figures revealing that $40.4 billion was invested in hotels in the first three quarters of 2014, marking the highest volumes seen since 2007. One of the most vibrant hotel investment markets is Dubai, where investors are increasingly attracted by the strong performance of hotels in the emirate, which are booming thanks to the record-breaking tourist arrivals that have been seen in recent years. So, why is investing in hotels such an attractive proposition, and how can those in Dubai reap the rewards? What should those interested in it look for in a potential investment?
Hotel investment is attractive for many reasons, with the first one being the lucrative returns that are on offer. Those investing in hotel rooms receive a proportion of the revenue generated when the room is occupied, whilst benefitting from hassle-free ownership. Unlike a traditional buy-to-let investment, hotel investment means investing in a fully managed and marketed asset. The investor can benefit from the marketing weight of the world’s leading hotel brands, whilst investing in an object that is fully managed and maintained. This means that the investor is free to concentrate on reaping the rewards of their investment, rather than worrying about the day-to-day hassles that are typically associated with property investment, such as marketing the property to find tenants and regular maintenance tasks.
Dubai is a popular hotel investment hot spot, thanks to the outstandingly strong performance of hotels in the emirate in recent years. Whichever way you look at it, Dubai has posted some pretty impressive tourism statistics, with huge numbers of people arriving into Dubai every year. Visitor arrivals increased by 10.6 per cent in 2013, whilst 2014 saw continued momentum, with a record-breaking 5.8 million people arriving in Dubai in the first six months of 2014. This has only been god news for hotel investors, with hotel occupancy rates having reached 81.7 per cent in October 2014 according to STR Global. The Dubai Department of Tourism and Commerce Marketing, which has targeted 20 million visitors a year by 2020, found that revenues for hoteliers and hotel apartment operators increased by 16.1 per cent in 2013, reaching Dhs21.84 billion in 2013.
One of the first considerations to made is whom you are actually investing in. It is important to choose an investment that is provided by a company with a good reputation and a strong track record within the field. The First Group, for example, is one of the leading providers of hotel investment opportunities in Dubai, with the British-owned company being responsible for many of Dubai’s most prestigious hotel developments.
Secondly, it is important to consider the hotel brand you are investing in. Choosing to invest in a hotel operated by one of the world’s leading hotel brands is often a smart move because they consistently post strong occupancy rates and high average room rates. It is also clearly a good idea to keep a close eye on what is happening within the hotel investment and property markets. Expert property consultants such as Jones Lang LaSalle and Knight Frank can provide useful advice and figures that show exactly what is happening within the market.