Dubai to rely on private investors to double hotel rooms by 2020 says tourism bossPosted on 05 May 2013 with no comments from readers
Dubai will rely heavily on investment from the private sector to achieve its ambitious new target of doubling hotel room supply by 2020, Director General of Tourism and Commerce Marketing, Helal Al Marri told the Arabian Hotel Investment Conference in Dubai today.
‘We have managed to double the number of hotel rooms in the past seven years so it is far from impossible to do the same, we are just repeating the same pattern again,’ he confidently declared. But there are doubts among bankers as to whether this private hotel construction program can be financed.
30% equity stake
‘Banks want a far higher equity participation by investors in hotels than before the global financial crisis, at least 30 per cent’ said Standard Chartered Bank’s Head of Real Estate for the Middle East, Fergal Harris whose bank successfully came to the rescue of the once stalled Fairmont The Palm hotel and residency.
‘We are just not prepared to shoulder all the risk while the owners get a far higher return on their equity,’ he told a breakout session held before the main conference. Still ArabianMoney found considerable enthusiasm for the Dubai Government’s announcement among hoteliers and plenty of new projects are being put together.
‘Melia is negotiating for one hotel on the Palm with a Russian and local investment partnership and looking at office and apartment tower conversions into hotels,’ said Maria Zarraluqui, Vice-President Development Worldwide. ‘We hope to annouce our next hotel in Dubai after Ramadan and would like to have five here rather than one as we do currently.
‘Why not? We have 20 hotels in Madrid under our different brands.’ The group, which operates 75 per cent of its 250 hotels outside Spain, is keen to expand across the Middle East with Doha as another target market.
150 new GCC hotels in 2013
This is going to be a big year for the roll out of new hotels across the Gulf States with around 150 new hotels set to open. Hilton has the biggest regional hotel development program with 48 new hotels in the pipeline, including the massive Conrad Dubai and Waldorf Hilton in Ras Al Khaimah.
The Trump Collection is opening an office in Dubai while an announcement from Langham Hotels is eagerly awaited for its UAE debut (click here). Wyndham Hotel Group announced a new 497-room hotel to be built in Dubai at the conference today.
However, in order to accommodate 20 million visitors in 2020 Dubai will have to build another 80,000 hotel rooms. If you accept the DTCM claim that half are presently owned by the government then this leaves a tremendous burden on the private sector to reach the new target.
Still as the Ruler of Dubai, Shiekh Mohammed bin Rashid Al Maktoum notes in his book ‘My Vision’ the word ‘impossible’ is not known in Dubai, and the government’s plans to expand Emirates Airline and the Dubai airports will greatly assist this ambitious plan. Bankers have been wrong before about Dubai.