Ten major theme parks, two safari parks and three international museums notwithstanding that are being developed concurrently in the UAE at present, the emirate is set to play host to several mid-market and budget hotel options.

As the luxury market saturates, supply of lower-graded properties is set to provide more choice to tourists.

Jones Lang LaSalle (JLL), real estate services firm, has noted in a report that almost 50 per cent of the 3,600 new hotel rooms to enter the Dubai market in the final months of 2015 would have a 3-star or lower rating.

Building more hotels is key to reducing hotel rates and making the emirates more accessible to a wider range of visitors, says Jamal Humaid Al Falasi, Director, Dubai Cruise Tourism.

“The aim is to attract more travellers from Africa and Asia. The development of budget rooms is set to cater to middle-class tourists from these regions, with more competitive room rates, as well as passengers who would like to have a shorter stay as they travel through Dubai," he told BusinessLine .

Falasi pointed out that the emirate’s bold plan to attract 20 million visitors annually by 2020 is less than five years away, and every segment within the tourism industry, including real estate and hospitality, was gearing up accordingly.

Home to the iconic Burj Al Arab, Dubai’s pace of construction continues to be the highest in the world. Of the current supply of almost 65,000 hotel rooms in Dubai in the first quarter of 2015, 44 per cent are 5-star rated.

However, Dubai recorded a 15.4 per cent decrease in occupancy, and a 22.9 per cent decline in revenue per available room, or revpar, in June 2015, as compared to last year, according to a report by STR Global.

Occupancy dropped 2.2 percentage points to 85.7 per cent in the first quarter from a year earlier, while the average daily room rate fell 6.1 per cent. STR Global’s preliminary July 2015 data for Dubai hotels, however, indicates 2.4 per cent revpar increase for July 2015.

"In the first quarter of 2015, 29 per cent of the current room supply is reported at 3-star or less," said Christine Davidson, Group Event Director of dmg events (hospitality portfolio).

Stating that almost 4,000 new rooms entering the market in 2015 would bring the supply of rooms in Dubai close to 70,000 in 2016, Davidson said it would enable the UAE to realise its vision of become a leading world destination by 2020. While 44 per cent of the hotels are forecast to be graded 3-star or less, a total 69 per cent of hotels would be 4-star or less.

Even the government has started to incentivise investors that are looking to develop three and four star hotels in the region.

For investors, these mid-range hotels would bring about lower construction and operating costs, and quick, high returns on investment.

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