Much better than middling

The Middle East laundry and drycleaning market will provide good opportunities for growth for global majors this year thanks to the ever growing demand for quality laundry services from local customers and improving regional economics.

In contrast to mature Western markets, where the annual growth rates rarely exceed 2-3%, the laundry and drycleaning sector in the Middle East states still has big potential for more active development and growth in years to come. Probably the biggest growth opportunities could be associated with such countries as Egypt, where, so far, the level of saturation of the market has been generally low.

In general, analysts expect the Middle East could be one of the most promising emerging regions for growth for global operators, which is also due to the reduction of their presence in other emerging nations, particularly Russia and Ukraine, which were an important part of their business in the past.

The ever-growing middle class and young rapidly growing population, seeking for Western standards of living, are providing another impetus for the growth of the laundry and drycleaning sector in the region.

In the meantime, most global operators are aware of these market trends being prime for a significant acceleration of expansion in the region this year.

Kaj Andersen, Jensen’s business region director, says: “The Middle East hospitality market is growing fast: Thousands of new hotel rooms are being built to accommodate the many tourists that are attracted to this amazing holiday destination.

“Jensen has been supporting all these developments with an independent sales and service office in Dubai since 2012. Our local team offers layout support, automation expertise, installation, and commissioning carried out by Jensenemployed and factory-trained engineers.

“The travel destinations in the Emirates, Oman and the Kingdom of Saudi Arabia are looking for sustainable laundry automation: Water is scarce, and the lifestyle of the people living in the area calls for premium linen solutions: travelling and residing in style is prevailing. Thanks to our expertise in heavy-duty laundry automation with a clear focus on ‘CleanTech’ solutions, Jensen makes a significant a contribution to the development of industrial laundries in the Gulf Area.

Lapauw recently told LCNi there is an ever-growing demand for equipment from major regional customers and it is expected this trend will continue throughout 2023. A spokesman for Lapauw Middle East and Asia Pacific comments: “For the Middle East we are seeing a substantial number of laundry facilities being either upgraded and or replacing aging equipment this will possibly translate into orders over the coming 12 months or so, this is based upon the type of inquiries being received.”

According to the spokesperson, as the industry is built on a number of sectors hospitality, healthcare, industrial then drycleaning there are many driving factors.

“The Middle East has various levels of tourism and a healthy percentage of hotels have their own in house laundry (OPL) then there are also classes of hotels that subcontract to outside service providers.

“Certain governments within the region have strong healthcare development policies. So, we expect there will be continuing demand throughout the region therefore making opportunities very competitive.”

In regard to potential challenges, Lapauw says it is dealing with postpandemic jitters affecting skilled labour, supply chain issues and at times unpredictable costs that affect the bottom line and efficiency in delivery.

In the meantime, Majd Abulaban, president of Girbau Middle East says that the market is rather challenging for the majority of the industry’s players, while ultimately success is based on several factors and specifics, which vary from country to country.

Abulaban says that specific results for companies in this industry can vary greatly and are influenced by many factors including the specific company market position, strategy and execution. However, in general, companies in this industry may have seen: ­

• Increased demand due to the growing population and tourism after the pandemic; ­
• Increased investment in technology to improve operation efficiency and sustainability; ­
• Expansion in services to reach new markets; and ­
• Implementation of strict safety and environmental regulations.

According to Abulaban, in regard of future market prospects: “It is currently difficult to predict the future demand for the commercial laundry and drycleaning services in the ME but it is likely to grow due to increasing population and economic growth. Major challenges the industry may face: ­

• Competition from domestic and selfservice options ­
• High operational costs, especially for utilities and water ­
• Difficulty in attracting and retaining skilled labour ­
• Need for technology upgrades to improve efficiency and sustainability. ­
• Adhering to strict government regulations and standard
• Despite traditional specifics of the Middle East market, most global brands operating in the market are ready for a further tightening of competition, while some of already have strong positions here.

André Tienemann (AT), sales manager, Asia & Middle East, at Kannegiesser tells LCNi the company had achieved significant developments in the Middle East laundry and textile care market in 2022, “with a focus on strengthening existing customer relationships, providing comprehensive support to key customers during periods of restructuring, and initiating new ventures, particularly in the healthcare sector”.

Tienemann expects the demand for quality laundry and drycleaning services will be growing in years to come and explains: “This will be driven by the increase in tourism and residential projects as a result of developments such as the normalisation agreement between Israel and the UAE and landmark projects like Sindalah and The Line. However, the industry is currently facing several pressing challenges. These include the emergence of cheap, short-lived solutions from Asia that stifle innovation and investment, the West’s tarnished reputation following the recent World Cup and other issues, and varying perceptions of sustainability among stakeholders.”

In the meantime, other global players interviewed talked about the importance of taking into account specifics of each country of the region, when planning expansion in it and the entire Middle East region. For example, such a position has been recently expressed by representatives of Alliance Laundry Systems – one of the leading players in the region.

Tim Bacon, senior director Middle East, Africa & India at Alliance Laundry Systems says: “In broad terms each country in the region emerged with different levels of urgency, some driven by events (FIFA) and others by outstanding and new projects such as NEOM in KSA. With the easing of supply chains and the rapid uptake of available supply the company exhibited unprecedented growth and further strengthened its leading position in the market. This was evident in all sectors, from retail stores through to high end professional textile care centres, and from cutting edge hospitality projects into healthcare institutions.

“In all cases the demand is migrating to more technologically advanced products that offer control flexibility, utility management platforms, integrated payment systems and similar whilst continuing to be environmentally friendly and ergonomic.”

Bacon continues: “Undoubtedly, the demand will grow as the region continues to diversify and expand into new sectors the current growth scenario should only increase. This will be driven by the major projects in the larger countries, however the downstream effect of these will filter into the entire region and will be spread across multiple segments. Value engineering due to overly complicated purchasing structures remains a challenge for the entire industry but I think the real development challenge will be in ensuring products and systems can deliver the intelligence required by the host. Whether that is live tracking and tracing of biocontamination levels, redundancy levels of capital equipment or seamlessly integrated payment and banking solutions, making sure a homogenous solution is available will be key.”

Pierre Salhab, sales manager Middle East and North Africa, Miele Professional says Miele has achieved year-on-year growth driven by the UAE market and is working to expand its dealer network in the region. He also believes laundry business will grow over the next five years and in the most segments of the market.

Salhab comments: “It is important to distinguish between the different segments: commercial dry cleaners, healthcare and hospitality central laundries. In Dubai and the UAE, hospitality laundries are well established and it is difficult to compete with them. However, the healthcare segment offers a great opportunity. But it is possible that rising oil and utility prices, as well as increased competition from other suppliers, may also impact the business.

“Our business in six to seven kilogram load capacity machines (Little Giants) is growing, and we are also working to improve and increase our presence in the larger 9 to 20 kilogram machines, the new Benchmark machines,” he said.

So, all in all, the Middle East is looking like a good playground, if somewhat challenging, for the big players to run around in. ­