Growth driven by increasing availability of Islamic finance The development of dry hotels (hotels that do not serve alcohol in Dubai has been growing in recent years, buoyed by the increasing availability of Islamic finance, according to industry experts.
“Sharia funds are growing rapidly,” said Rupprecht Queitsch, chief executive and senior partner at INHOCO Group, a hospitality consultancy in Dubai.
The government announced last year its aim to make the city the global capital of Islamic economy.
Total Islamic banking assets in the UAE grew to around $95 billion (Dh348.9 billion) in 2013 compared to $83 billion in 2012, according to a report by the Dubai Chamber of Commerce and Industry, which is based on a recent study by global consultancy Ernst and Young.
The dry-hotel trend started in the early 2000s, when Islamic finance became more available in the country, prompting investors to build such hotels, said Guy Wilkinson, managing partner of Viability Management Consultants, a hospitality consulting firm in Dubai.
“An increasing number of Gulf investors want to do dry hotels because of their religious conviction. So you’ll see more and more dry hotels,” he said.
Some analysts have said that the emirate currently has around 12 dry hotels and hotel apartments, while others said there are as many as 100. Among those are the Coral Dubai Deira Hotel, EWA Dubai Deira Hotel, Al Jawhara Gardens Hotel, Al Jawhara Hotel Apartments, and Coral Al Khoory Hotel Apartments.
Wilkinson pointed out that hotel apartments in the Gulf, including the UAE, are all dry, except for those that are linked to hotels with an alcohol licence.
Both dry hotels and hotel apartments must rely more on rooms than food and beverage to make profit, he said.
Laurent Voivenel, chief executive of Hospitality Management Holdings (HMH), explained that the company’s hotels’ lack of alcohol revenue is offset by reducing the food and beverage offering and increasing banqueting space and meeting facilities.
HMH operates the Coral hotels and hotel apartments, EWA Dubai Deira Hotel and The Ajman Palace Hotel.
“We are performing as well as any hotel in the market, in occupancy and in food and beverage,” Voivenel said.
Occupancy at HMH’s hotels in Dubai reached more than 80 per cent from January to the end of August, he said.
Most guests that stay at alcohol-free hotels are from the Gulf countries, especially Saudi Arabia, that look for accommodation which caters to their Islamic beliefs. However, some visitors that seek dry hotels also come from Europe, Wilkinson said.
“They’re for people from all over the world that want family-friendly accommodation with good facilities,” he said.
Voivenel pointed out that there are a lot of single women that stay at HMH’s hotels “because they feel safe as there are no people drinking.”
The development of dry hotels in the emirate is expected to grow in the next three to five years.
“If the funding continues to be available and the market grows in that direct, I don’t see any reason why [dry hotels] wouldn’t continue to expand,” Queitsch said.