DAY (1/100): Reading about the hospitality sector : KPMG's Dubai Hospitality Report!

Disclaimer: This blog is not intended to provide any investment advise and is strictly for personal goals of reinforcing learning :)

My intention is to summarize my readings for the day, and some of the facts I found most interesting. You can understand more about this concept in this video.

You can find the links to all articles cited hyperlinked within the article!

KPMG'S ANALYSIS REPORT FOR HOSPITALITY IN DUBAI

Today's reading was indeed super eye opening and extremely exciting. Industry analysis reports always excite me, but seeing so much information compacted into a consize 17 pager, with such a nuanced structuring made it all the more intriguing!

KEY FEATURES FUELING THE GROWTH IN DUBAI

There were some interesting insights in this report on why it believes hospitality might be Dubai's next big thing:

1) Highly supportive political environment

The D33 agenda of the Dubai government explicitly highlights its objective of making Dubai among the Top 3 superpowers when it comes to global tourism.

This creates a great precendent for the hospitality industry as these tourists naturally convert into their customers. The Dubai Economic Tourism Department or DET has even collaborated with EMAAR properties to market Dubai as a world class tourism destination!

As per KPMG, this won't be hard because there is so much modernity and tradition in Arabic hospitality promoting superior cultural tourism, but also the UAE has wide ranging landscapes from sand dunes in deserts to epic waterfronts, positioning it as a great place for adventure tourism.

Through its focussed strategic initiatives, there are also exciting avenues opening up in sustainability tourism, sports tourism, medical tourism, and even wedding tourism with a large influx of people flying in for destination weddings.

Not just this but the infrastructural projects in Dubai combined with its ease of setting up businesses now means that Dubai is attracting a large share in the MICE (Meetings, Incentives, Conferences, and Exhibitions) Market.

An intriguing pointer for me was the UAE's focus on cruise tourism where marine technologies, port technologies etc is gaining a string foothold in Dubai, thanks to the growing number logisitics solutions providers. With this, the UAE now has larger basket of services that can be provided to international tourists!

Dubai has also been consistently regarded as the third safest city for solo female travellers, which is a really huge achievement!

There are also a lot of efforts to streamline the visa obtaining process, allowing many people to not just come and visit,but also stay long enough to embark on an excting venture!

2) Dynamic Variety of hotels

The UAE is gradually becoming home to many, MANY Ultra High Net Worth Individuals, who specifically demand hyperpersonalized and curated luxury experiences in Dubai.

There is such a wide variety of boutique hotels opening up in Dubai, who's main purpose is to understand guest's expectations and provide them a personalized stay, customizing their cuisine, agendas and even their room decor. Typically these hotels aren't focussed on maximizing occupancy, but are focussed on delivering the best quality of service to their customers.

This is not to say that this is all Dubai has to offer. Indeed by introducing many relaxed Visa approval processes, the UAE is inviting a large number of aspirational tourists too, and this is encouraging several hotel companies to target this market section as well. 

3) Continuous development in value chain

There is also a very streamlined value chain that governs the Dubai Hospitality sector, as per KPMG. 

The targetted focus towards technologies and AI, is helping to streamline the room booking processes, as well as the marketing aspects, which helps to customize the attraction efforts for every customer.

It is also worthy to note that the hotel industry relies quite hevaily on real estate, which is booming in Dubai. Indeed the amount of land that will be under the cover of the hospitality and tourism industry is expected to increase by 134% by 2040. This helps to not just optimize costs, but also target a wide variety of market segments through a dynamic variety of hotels.

Apart from these, to enhance the overall tourist experience the government is working endlessly towards boosting connectivity, introducing projects like the Blue Line Metro and air taxis which help to ensure seamless travel across multiple locations and encourages a large number of tourists to opt for Dubai vacations.

Food and beverages are also a very critical component of the value delivered by the hotel industry, and given the UAE's clean and positive track record with UHNWI's, this country is attracting many Michellin star chefs, who collaborate with these hotels to provide clients a luxurious dining experience.

KEY CHALLENGES THAT LIE AHEAD

Staff training: Customer satisfaction is naturally the most important indicator of a hotel company's long standing sucess. Hence, staff training and accute resolution of client grievances must be of utmost importance to these companies.

Massive competition: The appealing case for tourism in Dubai is naturally creating a highly competitive environement for this industry in UAE with hotels like Hilton already expanding their foothold very keenly in Dubai.

The population is also rapidly expanding, expected to multiply by 4 times by 2040. This does't even include the day time population (the population who only visit Dubai for work, school etc) which is an even bigger market to work with and nuance your value offerings to.

Overall this industry looks like it's set for a dreamy griwth trajectory with lots of never seen before potential. However to capitalize on this fortune businesses must focus on enhancing their staff trainings and boosting the efficiency of their processes so customers can be satisfied and market share can be retained.

See you on Day 2! :)