Posted on 05 May 2013 with 2 comments from readers
Just in advance of the Arabian Travel Market week in Dubai this week, the Ruler Sheikh Mohammed bin Rashid Al Maktoum has thrown down a challenge to double the present number of visitors to the city to 20 million by 2020. Is this any more realistic than the target to achieve 15 million by 2015 set five years ago?
To be sure 10 million visitors last year was a huge leap on six million in 2006, almost double in fact. Perhaps then to double again in a similar period is not so unrealistic.
Delegates sitting down at the Arabian Hotel Investment Conference today in the Madinat Jumeriah will be mulling over Dubai’s ambitions and whether to back them. To reach its goal Dubai would need to double the number of hotel rooms to around 160,000, up from 599 hotels with 80,500 rooms now.
Earlier targets fell short not because of a lack of capacity at the airport or airline – both have outperformed the growth in visitors to the emirate. It was always a lack of hotels that left the visitor target shortfalls, though high demand has given Dubai some of the highest global figures for hotel occupancy and revenues, the envy of the business globally.
For hotel operators having room supply lag somewhat behind demand can be very profitable. Not that Dubai is slow to roll out new hotels. This year there is a bumper crop of new five-star palaces led by the world’s tallest, the Marriott Marquis (click here).
Going forward there is a massive pipeline of new mega hotels to come. The huge new Softels on the Palm and in Downtown Dubai, Mr. Al Habtoor’s four new hotels, the Hilton Conrad, and as ArabianMoney revealed last week, probably the first Langham in the UAE (click here).
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However, the expansion of hotels in the past decade was driven by investment from the Dubai Government in the guise of multiple entities. Given the constraints on government debt expansion post the 2009 real estate crash this will likely be less evident in the future.
Can the private sector take up the slack and deliver all those rooms by 2020? It’s a tall order but one the AHIC delegates will be considering today.
Most likely hotel rooms will continue to fall short of demand in Dubai. The city’s basic appeal as the commercial hub city of the Middle East, a growing safe haven and sunshine and beach holiday destination with some of the world’s most luxurious hotels is not going to go away.
But the hospitality private sector is probably going to be slower than the Dubai Government to invest in this potential gold mine.