Backed by a constant development in the tourist sector, demand for short-term rentals has actually increased significantly among tourists to the United Arab Emirates and a great deal of it relates to post-Covid travel choices paired with remote work alternatives.
And then, obviously, there is the Federation Internationale de Football Association (FIFA) World Cup in Qatar this November that will further drive visitor numbers to the region.
The development in the tourism sector of the United Arab Emirates throughout the very first quarter of this year surpassed that of 2019, making it among the very best quarters for the regional tourism industry. Dubai alone has actually received over 7.12 million international over night visitors in the very first 6 months of this year– a 183 percent year-on-year boost.
That’s triggered the growing interest of some family names in short-term rentals like Airbnb and Sonder.
Relieve of ease of access, prominent places, absence of brand name name-driven royalty fees, and competitive rates are the main drivers for the appeal of short-term rentals, kept in mind Mohamed Tahir, brand name expert at Dubai-based The Adroit Firm.
Skift in its earlier function The Definitive Oral History of Short-Term Rentals has traced the transition of short-term rentals from categorized ads in newspapers to a full-blown market that interrupted standard hospitality designs.
In August, Sharjah– among the emirates in the country– introduced its “Holiday Residence Task,” allowing residents to lease places they own to travelers and visitors. There are estimated to be more than 300 holiday homes in the emirate, according to the Sharjah Commerce and Tourism Development Authority.
Dubai has likewise presented numerous reforms targeted at attracting more people to the emirate, consisting of the remote working visa and multi-entry traveler visa, which might help this section over the coming years.
Dubai has actually reported 10,000 active vacation rental listings. Occupancy rates in these units are said to have increased 32 percent from December 2020 to December 2021, with a 15-28 percent boost in typical day-to-day rate and average month-on-month tenancy growing to 94 percent.
Even though the percentage of short-term rentals vis-à-vis the hospitality supply in the country, is approximated to be reasonably low compared to other essential entrance tourist markets, the offering is now rather varied.
Besides Airbnb systems, operators such as Sonder are likewise present in the United Arab Emirates market. Emaar Properties, Dubai’s largest designer, along with Accor with the SLS Dubai Hotel and Residences in Company Bay are also entering into the short-term rentals market in the country.
Who Are Remaining at These Short-Term Rentals?
Even as there are appointments about the short-term rental business not being well controlled in most parts of the world, the demand for these systems has actually shot up in certain sectors– mid-tier service specialists, experts and families going to for leisure.
These units use tourists the benefit of a completely equipped house while providing more freedom than hotels.
Short-term leasings usually offer greater yields than conventional long-lasting leasings as the estimation considers the non-occupancy of the system based upon the yearly lease worth, noted Turab Saleem, partner– head of hospitality, tourist and leisure advisory services, Middle East and North Africa for Knight Frank, a real estate consultant.
“As an outcome, rental returns are 10-15 percent greater,” he noted, adding that demand for short-term rentals is anticipated to increase over 2023, underpinned by continued renter interest in more flexible leases, together with experts making the most of Dubai’s brand-new remote working visa.
Filling the Accommodation Gap Throughout Qatar World Cup
Reports suggest that Dubai homeowner are switching from yearly leases to short-term rentals to prepare for the inflow of football fans throughout the World Cup.
Whilst the World Cup will overlap with what’s currently a high tourist season in Dubai, the country does anticipate a short-term overflow of tourists pertaining to Doha wanting to explore the region as an entire, according to Amr El Nady, head of hotels & hospitality for Middle East & Africa and executive vice president of global hotel desk for JLL.
“It might not be directly apparent on tenancy metrics as those traditionally go beyond the 80 percent mark in November, but it is anticipated to have a higher effect on the room and rental rates,” El Nady stated.
With the Qatar event being touted as the most geographically-compact World Cup, Doha hotels would be hectic and the jam-packed schedule of shuttle bus flights being run by Dubai and Abu Dhabi-based providers to Qatar would enable fans to fly in between the two countries making United Arab Emirates busy also.
With hotels currently charging high rates throughout that season, short-term rentals present choices for mid-market and visitors with households and groups taking a trip together, Saleem noted, including, “Brief and mid-term leasings will support to satisfy the total space in the lodging market which will help the developers and owners to maximize their yield throughout the World Cup.”
Will Hotels Feel the Heat?
The absence of a larger service offering helps short-term leasings provide more competitive rates than hotels, making them appealing to travelers who do not require ancillary hotel facilities.
With hotels and short-term leasings contending for the same target audience it is inevitable to explore the competitive nature of the two businesses. “In the longer term, we do expect short-term leasings to offer a greater proportion of competitiveness vis-à- vis standard hotel operating designs,” said El Nady.
While it does not straight affect hotels, it does provide alternatives for visitors, kept in mind Saleem. “It is unavoidable to separate these two lodging services– both units will exist side by side serving various clients. Short term leasings are here to stay.”
Tahir nevertheless, believed that short-term rentals are still lagging behind when it pertains to defining their brand name persona and this is where hotels have an edge.
Customer choices have actually changed as travelers today look for significant experiences over discounts from cookie-cutter hospitality experiences. This shift in consumer behavior is a big sign for hospitality brand names to evolve and align with the needs of the modern-day traveler, said Tahir. “The section that caters to this need is bound to win the race.”