R Hotels targets Dubai’s booming tourism market with Dh1.5bn investment

R Hotels is planning a Dh1.5 billion expansion in Dubai as it seeks to exploit the emirate's rapid increase in tourist arrivals.

Next month, the Ajman-based hotel arms of investment firm R Holding will open a 175-unit hotel at The Walk at Jumeirah Beach Residence, among the emerging destinations for hotel properties in Dubai.

In its first year of operations, the new hotel is expected to achieve 80 per cent occupancy and an average room rate of Dh700 to Dh900.

R Hotels owns, manages and operates two properties in Ajman and one in Dubai – all Sharia-compliant – under the Ramada brand name that belongs to the US-based Wyndham Hotel Group.

"We are very hopeful about [the World Expo] 2020, and it would be amazing if Dubai gets it," said Sumair Tariq, the managing director of R Hotels. "But take the worst-case scenario, even if it doesn't, Dubai will still be Dubai and tourists will still come for safety and security reasons and it has something for everyone."

In the first six months of this year, 5.5 million tourists visited Dubai, an increase of 11.1 per cent over the same period last year.

R Hotels has also bought land on the crescent on Palm Jumeirah and expects to open a 160-unit property there in one-and-a-half years’ time.

It is hoping to have its third new hotel built in Downtown Dubai or the Business Bay.

“Yes, you have to pay a premium [to get properties in these areas],” Mr Tariq said. “But everybody in the hotel industry wants to have a property in these locations [because the annual growth of tourism] has been amazing.”

Indeed, 65 per cent, or 334, of the UAE’s existing hotels are located in Dubai, according to the hotel industry research firm STR Global’s data, released last month. A further 57 new hotels are in the construction pipeline.

R Hotels, which started business in 2008 before the global financial crisis, opened Ramada Hotel & Suites Ajman in the last quarter of that year. The company entered Dubai with the 181-unit Ramada Downtown in the fourth quarter of 2009.

Ramada Downtown Dubai, which is comprised entirely of suites, has an occupancy rate of 88 per cent and average revenue per room of about Dh800, according to Mr Tariq.

Meanwhile, R Hotels is looking at hotel properties in central London, too. The real estate arm of its parent group R Holding is already present in the market and owns six properties in central London.

“Central London has the same market as here and many Gulf families go there for holidays,” Mr Tariq said.

R Hotels, he said, was also looking to enter Mecca in five years’ time.