The cost of a budget room has risen as high as US$245 a night around Dubai’s convention centre as thousands of delegates troop into the city for the start of one of the region’s biggest travel shows.
Delegates are willing to pay top dollar for rooms close to the Dubai World Trade Centre, the venue of the Arabian Travel Market (ATM), which starts tomorrow.
This year, more than 2,500 exhibitors are expected to attend the event that is likely to attract more than 21,000 visitors.
About 80 per cent of the exhibitors are from outside the UAE and more than a third of visitors are expected to be from overseas.
That means brisk business for Sheikh Zayed Road properties, such as Conrad Hilton, H Hotel and Fairmont across the street. Rooms at Conrad Hilton a week before the exhibition were going for Dh1,748, including taxes, and for the first day of ATM the rate rose to Dh2,180. The rate falls to Dh1,160 next month.
Hotels closer to the convention centre are packed.
The budget hotels Ibis and Novotel are booked out for the initial days of the Arabian Hotel Investment Conference, which lasts two days starting today, and the ATM, which runs from tomorrow through Thursday.
At the Ibis, room rates during ATM are $245 a night without breakfast and taxes. The same rooms cost $74 later in the month.
“Our individual and group business is primarily driven by the Dubai calendar of exhibitions and events, but we also have a strong corporate base, which supports us throughout the year,” said Frederic Gitzner, the general manager of Ibis and Novotel hotels near the convention centre.
About 70 per cent of their guests are business travellers.
In the long run football, Expo 2020 and the Haj are propelling a regional hotel boom that will bring $5 billion in projects to Dubai alone over the next five years. That is the assessment of Edmund O’Sullivan, the chairman of Meed Events, the organiser of the Arabian Hotel Investment Conference.
The investment conference is a talking shop for hotel investors and developers. It sets the stage for ATM, which is geared towards networking and deal-making.
“Dubai has the best performing hotel investment market, has one of the highest hotel occupancy rates on the planet, and the [sector] has never been more profitable,” Mr O’Sullivan said. “Investors are looking to capitalise on that, and hotel management groups will be looking for the best projects.”
Dubai has the highest room rates in the Gulf. In March, the average room rate in the city touched $398.71, compared with $157.76 in Abu Dhabi and $255.84 in Riyadh, according to TRI Hospitality Consulting.
Hotel room rates in Dubai typically peak between January and April as well as the Eid holidays, but also rise substantially during large events such as ATM.
“This is a normal yield-management technique used by hotels across the markets. However, in Dubai this is quite pronounced due to the generally high rate and occupancy levels,” said Rashid Aboobacker, a senior consultant with TRI Hospitality Consulting.
Mr O'Sullivan said that there are almost 100 branded hotels and hotel apartments in Dubai's pipeline ahead of the city's hosting of Expo 2020.
The boom holds true elsewhere in the Arabian Gulf as well. Qatar, for example, is investing in massive capital-intensive projects ahead of the 2022 Fifa World Cup. Saudi Arabia remains the region’s leading destination, thanks to Umrah to Mecca, and the kingdom is looking to increase domestic tourism.
More than 75 per cent of the demand for total room nights for Dubai’s four and five-star hotels last year came from leisure visitors, with the rest from business travellers, Mr Aboobacker said.
A gap, however, remains in the country’s budget hotels segment. Most of the 20 million overseas visitors Dubai expects for Expo 2020 are likely to want mid-market accommodation.
“Dubai doesn’t have enough good-quality $100-a-night hotels”, Mr O’Sullivan said. “The question is whether it is possible for the hotel investment industry to deliver affordable accommodation with the rising construction and labour costs.”
ssahoo@thenational.ae
Follow us on Twitter @Ind_Insights