Room rates rise in Dubai as tourists flock to sun

Tourism to Dubai this month is up sharply on last year, helped by the Dubai Shopping Festival and the Arab Spring.

The Dubai Shopping Festival is forecast to boost Dubai's economy by more than Dh15 billion. Pawan Singh / The National
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Dubai's hotels are raising their rates amid a surge in tourism this month as the shopping festival and good weather attract visitors in droves.

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"We are no doubt automatically increasing our rates," said Naeem Darkazally, the vice president of sales and revenue at Rotana Hotels. "January in general, I can't believe what's happening. It is really outstanding. We traditionally have a dip in our traditional source markets that are not leisure-oriented in the first 10 days of January. But the first days of January have been astronomical. Occupancies have been at 100 per cent, 90 per cent, all the days."

Rotana's revenue per available room, an industry indicator calculated using occupancy levels and room rates, is up 20 per cent on January last year, according to Mr Darkazally.

"All the ingredients are in place for this year to be a strong year in Dubai," said Chiheb ben Mahmoud, the head of hotel advisory at Jones Lang LaSalle Hotels Middle East and Africa.

"As long as the demand is there, rates will be adjusted upwards," Mr ben Mahmoud said. "The performance has been improving. The end of the year period was good. Now we are seeing the main attributes of Dubai in full motion.

"There is the sun in the winter - motivation for eastern Europe and western Europe. You have the Dubai Shopping Festival for the region. All of this is pushed by very strong marketing by Emirates Airline. In January we have a combination of business travel as well as leisure travel."

Wael El Behi, the executive assistant manager at Ramada Downtown Dubai, said the hotel had achieved an occupancy level of 93 per cent in the first week of this month. "It's an amazing start to the year," he said. "The hotel already has 84 per cent occupancy in terms of business already on its books for the month and is targeting 92 per cent occupancy for January.

"It's a very good scenario for the start of the year. The way I see the business trend now is demand is high, there are good weather conditions, and the political situation in other countries will help Dubai get more share, so I don't think there will be a lot of packages and discounts. Everyone is trying to maximise. It looks much better than last year. There is a boost in average room rates because there is good demand."

The global economic downturn in 2009 forced hotels in Dubai to drop their rates sharply.

The Dubai Shopping Festival, which is forecast to boost the emirate's economy by more than Dh15 billion (US$4.08bn), started last Thursday, two weeks earlier than last year.

"I think the shopping festival impacts the whole city, not just the hotel occupancies," Mr Darkazally said. "I think the festival keeps Dubai on the map."

It is expected to draw Chinese, Indian and GCC visitors in particular, he said, with tourists who come for the festival typically staying for at least a week.

Mr Darkazally said the increase in demand, helped by the Arab Spring, meant Rotana had been less generous with its promotions for the festival this year.

It had thrown in freebies such as breakfast and airport transfers for extended stays but was not offering free nights for guests who stayed a certain number of days, as it did last year.

"The demand is high from all segments - there was no need to give any free nights really," Mr Darkazally said.

Hoteliers across the city reported a growth in demand.

"Every year Dubai Shopping Festival is coming up with new activities," Mr El Behi said. "Adding to this is the Saudi school holidays in the last week of January, so this will help."

Retailers said the first days of the shopping festival looked promising.

"Looking at the numbers, it's quite positive if we have to compare the first few days of Dubai Shopping Festival this year and last year," said Ishwar Chugani, the executive director for Giordano Middle East. "There is significant positive growth. We hope that it can continue throughout."

But fluctuations in currency markets could have an impact.

"Those that are linked to the dollar, like the Chinese yuan, they will continue to come … while people from India and Europe may think twice," Mr Chugani said. "There could be a reduction because of the reduction in the euro and the Indian rupee. We see a lot of Asian tourists, especially from China.

The Arab Health conference this month is expected to provide a major boost to the numbers of business travellers coming into the city.

"The Arab Spring is having a big impact," Mr Darkazally said. "Companies and leisure travellers were waiting for things to settle down and they didn't. I think there are not many other options left and Dubai becomes the main haven for leisure, for holding conferences and meetings. The weather has been fabulous. I hope the momentum continues."

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