Once the domain of budget offerings, the economic reality of certain markets is allowing space for laundry-list, pick n’ choose hotel chains. Smartotels is one chain seeking to fill that space, and it has its sights firmly fixed on both guest and investor needs.
DUBAI, United Arab Emirates—Hotels built around a low-base rate with a laundry list of additional extras have largely inhabited the economy segment, but Smartotels Hospitality International hopes to bring that same approach with a higher-end feel to its new brand, Form Hotel.
The United Arab Emirates-based company expects the concept to find a foothold in the Middle East, and especially Dubai, where there has been a recent rise in budget and economy hotels as a direct effect of falling oil and energy capital flows and the subsequent efforts to diversify tourism bases away from only high-end provision.
Dubai’s much-touted Expo 2020 also is responsible for the increase in this segment, with one example being InterContinental Hotels Group announcing a 520-room Holiday Inn to open by late 2017 or early 2018 in the Dubai Festival City district.
This boom includes properties, such as the Tune Hotels and EasyHotel chains, that start with base average daily rates but allow guests to add individually priced extras.
Smartotel founder and managing partner Tarek Daouk said he hopes to take this concept and refine it, bringing a higher-end spin to the brand’s design, service and quality; though it will lean towards a higher-end product.
Daouk said now is the right time for a Middle Eastern startup brand to be opportunistic in guest demands but still be cognizant of investor requirements and adding value at every stop of the hotel stay or ownership journey.
“It’s all about timing,” said Daouk, who previously worked for Goldman Sachs. “This is especially important in the Middle East right now. Get that wrong, and investors will go into other asset classes. They have their sights fixed on yields and opportunities.”
Daouk, who is Lebanese but has also lived in the U.S., Canada, Germany and France, said Smartotels remains in its capital phase, with an investment mix derived from the UAE and Saudi Arabian family, high-net-worth individuals and institutional funds.
He said the brand’s model should be attractive from an investor’s perspective.
“For investors, the model will condense fixed costs and expand variable ones,” Daouk added.
The company will grow swiftly, Daouk said, adding that the development target is for 25 hotels before 2026 with a combined room count of approximately 3,500.
One property is already in construction, a 143-room hotel scheduled to open in the first quarter of 2018 that will, Daouk said, be upper-midscale/upscale in feel if not in ADR.
“Form will be a bespoke hotel, with all you value and nothing you do not,” he said. “We looked at every industry in determining what that means and will be. We live in a world where you can design your own car, furniture, shoes, even pharmaceuticals. Hotel guests, too, should be able to pick and choose.”
Daouk said a brand needs to operate in this sphere in the Middle East due to guest demand and industry competitiveness.
“It is not about generations X or Y, or whatever, or about a demographic,” Daouk added. “It is about how guests in general consume. Guests today are hyper-connected bargain hunters. For many, austerity is fun.
“Travelers are hybrid now, trading up in some areas, down in others.”
Daouk said Form might be tweaked in different markets, and, unlike Western brands moving in a similar orbit, some Form properties also might include restaurants and rooftop pools.
An emphasis on technology, design and social responsibility will be at the brand’s core.
Daouk said, just as with guest demands, Form’s hotels will be hybrid, too, and he used the same language “trading up in some markets, in others down” to describe his hotels.
General add-on options will include turndown and personal trainers.
New breeds of traveler need not worry, Daouk said, as free high-speed Wi-Fi will be a given.
“We can keep up with trends, because we can add them without differentiating from our core offering,” Daouk said.
Outside of the Middle East Gulf Cooperation Council member countries, the company aims to expand in Africa, Daouk said, who mentioned specifically Morocco, Kenya and Nigeria.