Accor, Europe's biggest hotel operator, is planning to step up the growth of its network of budget Ibis hotels in the UAE and wider region as part of a €150 million (Dh760m) global initiative.
The French-based company this week announced plans to divide its Ibis hotels into three separate brands, allowing Accor to explore franchise opportunities in the region.
"It will help us to develop even further our product," said Christophe Landais, the managing director of Accor, Middle East, explaining that was partly because the Ibis name was already well known in the region.
The company is considering introducing the new Ibis Styles name, which would generally involve rebranding an existing property, rather than developing a new hotel.
Ibis Styles will replace Accor's All Seasons brand, which has not had a presence in the region. The third brand is the Ibis Budget brand, which replaces the company's Etap Hotel marque.
Dubai has seen an influx of inexpensive hotels in recent years, including new Citymax properties, Holiday Inn Express, and Rotana's Centro. There is also an easyHotel at Jebel Ali, which charges rates of Dh99 (US$29) a night.
Industry insiders say these properties have helped to close a gap in the market for cheaper hotels and enabled Dubai to appeal to different types of travellers, rather than just the luxury market.
The rise of low-cost airlines in the region, such as flydubai, has also contributed to increasing the numbers of budget visitors to the UAE, said Mr Landais, adding it was too early to place a number on how many hotels it could develop in these arrangements.
"It's quite new for us as well, so now we need to estimate what the potential of the market is and what the interest of family-owned hotels are," he said.
"There is more opportunity. Now we need to assess and quantify those opportunities."
But Dubai and Abu Dhabi were not yet ready for the Ibis Budget brand, he said.
This brand has much smaller rooms, is about 20 to 30 per cent cheaper than a standard Ibis hotel in terms of room rates and is normally built from scratch to meet the standards of the brand. The Ibis Budget brand was comparable with easyHotel, said Mr Landais.
"The market in Dubai has moved tremendously in the last six to seven years … and we have seen a lot of economy hotels coming up.
"Now to go lower than that, we have to see if the market is ready for it. Is it possible in terms of return on investment for the investors, considering the cost of land?"