_The impact of Airbnb on Dubai’s hotels
Unlike many other markets - in which short-term rentals are traditionally outside major hospitality nodes – Dubai’s short-term rentals are concentrated within hotel districts.
From a geographical perspective, hotels in the Marina, JBR, Media City, Downtown Dubai and Sheikh Zayed Road tend to be the most severely impacted. Even if not directly competitive, holiday home supply in these locations has handicapped the ability of properties to yield during peak periods which is attributable to the fluid nature of short-term rental supply, which can be taken on and off the market almost instantaneously at low marginal cost.
"From a product perspective, locally branded hotels that have no clear points of differentiation face more direct competition from holiday homes. "
By contrast, properties with well recognised operators, unique attributes, extensive amenities, MICE facilities, and strong loyalty programs tend to be less impacted by the holiday homes market.
However, with ‘experience’ based stays being introduced and loyalty programs likely to follow, it is becoming increasingly more important for hotel owners to view the short-term rental market as directly competitive to hotels, rather than a business model that targets a different demand demographic.
By doing this, owners and operators can formulate effective revenue management strategies and give consideration to the entire market, which in turn will protect the value of their asset.