The growing demand for sustainable hotels in the Middle East

Investors, take heed! The demand for sustainable hotels in the Middle East, particularly in the UAE, is gaining momentum, aligning with the global trend.

There is a growing interest from both the public and private sectors, driven mostly by global and regional trends. While the Middle East is still an emerging market for sustainable hospitality, compared to Europe’s well-established sustainable industry practices or eco-friendly destinations and/or accommodations across Africa or Asia, there are great opportunities for investors in the Middle East:

1. Guest Demands: Global and regional trends show that customers are becoming increasingly conscious about hotels enforcing sustainability. In the medium term, while some hotel operators focus on implementing sustainable initiatives that reduce operational costs, investors should think long-term and anticipate that guests’ demands will increase.

2. ROI: Sustainable hotels, despite their higher initial construction expenses, provide greater long-term operational efficiencies. Investors should anticipate increased upfront and construction costs. While most of these costs will be paid off throughout the lifecycle of the asset, this doesn’t apply to all sustainable decisions.

3. Government Support: There is rising Government support and potential incentives for sustainable ventures, which should only increase in the years to come. In the UAE, the industry’s commitment to eco-tourism continues to grow. Ras Al Khaimah recently received the Silver Certification under EarthCheck’s Sustainable Destinations and is the first Middle East destination to achieve this accolade.

4. Property Features: For those investors looking to enhance existing assets, recent innovations in green technology can provide a great solution. In the Middle East, countries are very focused on solar power and the same applies to the region’s hospitality industry. ROI and payback on solar panels are relatively easy to calculate for investors and operators alike, as the investment directly translates into lower utility costs. Solar panels easily allow a hotel to introduce sustainable practices without deteriorating the guest experience. We are witnessing more hotels across the region adapting their rooftops or car parks to accommodate solar panels. Additionally, when it comes to air conditioning, several technologies have recently been implemented in both new and refurbished properties, with more sustainable Guest Room Management Systems (GRMS), thermostat systems, and more efficient AC systems overall.

Recently, for the development of SAIJ Mountain Lodge, a 70-room hotel in Jebel Jais, the Stirling Hospitality Advisors team assisted in conducting several feasibility studies to determine the feasibility of using solar panels. The team proposed several sustainable solutions to the investors, in partnership with solar companies, as solar is a great complement to generators or connected power and provides a relatively short payback period.

Investors, be part of the sustainability movement! The Middle East is rapidly transforming into a hub for sustainable hospitality. The region is embracing eco-friendly accommodations with renewed interest, opening up exciting investment opportunities. Get in touch with us to learn more.

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