CEO shares developer’s vision for foray into UAE hospitality sector
Farhad Azizi, CEO of Azizi Developments. _photo provided
Dubai-based developer Azizi Developments recently announced its foray into the UAE’s booming hospitality industry. The company aims to contribute Dh60 billion to the joint venture as the country seeks to increase investment in the hospitality sector. The company’s plans also include a seven-star hotel.
Azizi Development CEO Farhad Azizi shared his thoughts on the company’s new business in an exclusive interview with Khaleej Times. extract:
What motivated you to enter the UAE hotel market?
The hospitality industry is particularly prominent in our home country of the United Arab Emirates, where Dubai welcomes an influx of tourists year after year and continues to be crowned the world’s number one tourist destination.
We have long planned to enter the hospitality industry, and Dubai is the most popular tourist destination in the world. We think the emirate is the most welcoming and exciting place to visit, with more wonders to see than any other city in the world, and we want to be an active part of it.
Our launch coincides with the 30th edition of Arabian Travel Show, the region’s premier event for the inbound and outbound travel industry and the largest event of its kind.
More importantly, the announcement also takes into account the announcement by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, that the UAE aims to reach 40 million tourists and increase the contribution of tourism to GDP. contribution to AED450 billion in seven years. The UAE wants to increase investment in its hospitality sector by AED100 billion. We are proud to contribute AED 60 billion to this effort.
We are excited to bring our own hotel division and brand to Dubai and beyond! This announcement is one that Azizi Developments has been preparing extensively. We started buying land for hotels many years ago.
So, it is also important to note that unlike other large real estate developers in the UAE, we will not only develop these hotels and resorts, but also run them ourselves.
What are your estimates for the UAE hotel market?
Assessing the industry from the perspective of investment prospects, the future prospects are promising. Key factors such as Dubai’s strategic location, presence of global corporate entities, and top attractions all contribute to the growth and attractiveness of the hospitality industry. This is in line with the progressive vision of the UAE, creating a ripe investment environment while driving economic growth through job creation.
In terms of expected returns, the Dubai hospitality industry shows great potential. This is reflected in projected growth in average daily room rates and revenue per available room, although an environment characterized by low occupancy rates and increasing supply remains challenging. However, this is set to change in the coming years as Dubai’s popularity as a tourist hotspot soars. Underpinning our bullish outlook is hotel occupancy forecast at 80% this year, as suggested by Zoom Property Insights. The same source predicts that Dubai’s international tourist arrivals will exceed pre-pandemic levels by 2023, which will greatly benefit the hospitality industry.
This growth trajectory was further evidenced by Dubai’s hotel occupancy rate reaching 73 percent last year, receiving 14.36 million international tourists, according to Dubai’s Ministry of Economy and Tourism. In addition, the KPMG Dubai Hospitality Report highlighted that Dubai’s hotel occupancy rate reached a 15-year high of 96% by the end of the expo, with tourism contributing $29.4 billion to the economy in 2022.
Strategically, the UAE’s hotel market stands out as one of the most lucrative in the world, with the industry set to add 48,000 rooms by 2030, with a target of 25 percent growth to cater to growing tourist numbers.
Digitalization and sustainability are two important trends in 2022 and are expected to remain the dominant themes in the hotel industry. A strategic push for contactless check-in, reducing carbon emissions and promoting inclusion and diversity means an innovative and socially responsible sector.
Are you only considering building a hotel or will there be other facilities?
In the next five years alone, we will add 20,000 keys to our hotel inventory in Dubai. As a leading developer, we now leverage our real estate capabilities and in-depth understanding of the needs of the accommodation sector to deliver unrivaled hospitality experiences to global travelers. We see our expansion into tourism as the next big step in our overall mission to improve lifestyles and look forward to presenting our upcoming hotel projects to stakeholders in the UAE and beyond in due course.
Over the next few months, we will be presenting our upcoming hotel projects to stakeholders across the globe.
Although the hotel is still being designed and the brand is still being developed, we have already purchased a lot of land. These in themselves will differentiate our hotels and resorts from other market offerings.
All of our upcoming hotels will be high-end hotels, most of them five-star hotels and one seven-star hotel.
Another exclusive insight I can give you right now is that our seven-star hotels will go far beyond just meeting the five-star requirements of DTCM. It will break many world records, which we are excited to share with you in due course. Each of the hotel’s seven floors will be themed to a certain region of the world. World locations will be selected based on the depth of their culture and heritage. We will select outstanding cultures with rich and unique histories. We believe this is in line with Dubai being a cosmopolitan, multicultural and hospitable city that is very welcoming to people from all over the world. We want our hotel to represent the best of the extraordinary city of Dubai.
I can’t reveal too much about portfolio spreads yet, but we’ll make more announcements in due course.
Will you form partnerships with global players?
We do not work with any hotel chains or global players. What sets us apart from many of the other developers in the UAE that are entering the hotel industry is that we don’t just develop buildings and let another hotel chain run them. Instead, we are building our own hotel brand and will self-operate our hotels globally.
What are your plans for the industry?
We want to contribute to the ambitions and plans of the UAE leadership, and we will play an active role in helping to generate new investment in the tourism industry targeting AED100 billion with an investment of AED60 billion.
We are investing AED 60 billion over the next five years, funded from our own funds by opening more than 50 high-end hotels in Dubai. Our development business has been – and will continue to be – very successful and profitable, allowing us to diversify into hospitality without the need for bank financing. However, we may use funding from external third parties if the need arises.
In our portfolio we already own several land parcels in key tourist destinations in Dubai.
What I can reveal at this stage is that one of them, the seven-star hotel, will be the second tallest tower in the UAE, on a strategically located plot on Sheikh Zayed Road, just opposite the World Trade Centre.
In future phases of our development plan, we aim to expand the reach of our hotel brand globally. We plan to purchase and develop land plots in major metropolitan cities such as Singapore, Hong Kong, Frankfurt, London and Paris. More information will be shared in due course.