UAE hotel revenues to fall in 2009
Posted on 10 March 2009 with no comments from readers
New data from the Dubai Department of Tourism showed only a very marginal increase in visitor numbers from 6.95 to 6.99 million last year, while revenues were up by 15 per cent to $4.1 billion.
With deep discounting now evident in the local hotel sector it therefore seems inevitable that revenues will fall in 2009, and visitor numbers may also decline. It is a pause in a remarkable cycle of growth in the Dubai hospitality sector since the last downturn in 1999.
Discounting
But Dubai is no slouch in responding to changing and more challenging business conditions, and discounts in excess of 40 per cent recently have been helping to keep occupancy levels up. As reported on this blog last week the beachfront hotels, in particular, are presently close to capacity.
Part of the problem is that an increase in the supply of hotel rooms is hitting the market at a time of falling demand. Total hotel rooms available grew by 16 per cent to 49,598 last year, and that brought hotel occupancy down from 84 to a still healthy 79 per cent, according to a new study from Jones Lang LaSalle.
Another issue for Dubai hospitality is that it hosts many visitors from the UK and Russian whose economies are deep in recession and suffering from currencies that have devalued hugely against the US dollar, to which the UAE dirham is linked by a fixed rate peg.
New markets
Officials at the tourism department are refocusing on South America, China and Scandinavia and also looking for convention and conference business now that hotel rates have come tumbling down.
However, 2009 still looks unlikely to be a complete disaster for the Dubai hotels as they are coming off a period of super-high occupancy and not dropping into a loss-making zone. In February five-star beach hotels ran at an average of 95 per cent occupancy with an average rate per night of $337.
In short Dubai continues to boast a hotel sector that is the envy of the world, but with more hotels opening in 2009 the down pressure on the city’s hoteliers is likely to get rather worse before it gets better.
