Show season cloud for hotels

Hotels in Dubai are disappointed with this year's conference season as more properties compete for business and the regional unrest keeps some potential attendees away.

Downtown Dubai's skyline in Business Bay rises through the early morning fog yesterday. It is conference and exhibition season in the emirate. The period is worth Dh1.1tn a year thanks to the thousands of business travellers who visit, but economic woes mean hotels are having to compete harder for guests. Pawel Dwulit / The National

The start of the exhibition season in Dubai is not providing the usual boost for the city's hotels as thousands of delegates arrive in the city for big industry gatherings.

An increase in the number of hotel rooms, regional unrest and European economic woes are forcing hotels to compete harder for guests.

"What's happening around Europe and in the Middle East has affected probably the number of travellers," said Naeem Darkazally, the vice president of sales and revenue at Rotana. "But the bigger impact is the increase of inventory in the city."

The conferences, events and exhibitions sector is highly lucrative for Dubai, with the global industry worth an estimated US$300 billion (Dh1.1 trillion) a year.

Thousands of business travellers pour into the city during this month and next for major exhibitions such as Gitex, the technology show, the Dubai Airshow and the Big 5 construction industry exhibition.

Mr Darkazally said hotels had budgeted for a surge in demand in the last quarter of the year amid signs of economic improvement in Dubai - but such a surge had not materialised.

Some hotels have had to cut supplements on rates they normally charge for the big exhibitions such as Gitex.

"This year it has been very disappointing," said Habib Khan, the general manager of the Arabian Courtyard hotel in Bur Dubai.

"The demand has deteriorated. It's definitely worse than last year. We used to add a supplement to our selling rate because the demand was very high."

But this supplement of 15 to 20 per cent on the hotel's room rates had been removed this year.

Mr Khan said this was partly because there were more hotels competing for business in Dubai and he believed the number of visitors had decreased both because of the regional unrest and European companies tightening their belts.

"Some of the hotels are filling their rooms with groups from budget countries, like India, China," Mr Khan said.

Certain districts including the Sheikh Zayed Road and Downtown area tended to benefit more from certain conferences because of their proximity to the Dubai International Financial Centre and the city's main convention centre.

"November is full of events with the air show, Big 5, the Eid holidays," said Wael El Behi, the executive assistant manager at the Ramada Downtown.

"My only concern is that the number of hotels is increasing, so definitely not all the hotels will be running the same occupancy level as it used to be previously, but the potential is still there and the number of guests are increasing."

Mr El Behi said that events such as Gitex were still helping business this month, while the hotel expected to generate room revenues of about Dh4 million next month with an occupancy of 87 to 90 per cent.

The relative affordability of Dubai's hotel rooms was helping to drive business into the emirate, he said.

Dubai's Cityscape show last week was scaled down by more than half compared with the previous year, with the exhibition spread over just three halls this year, reflecting what has happened in the property market in the emirate.

But in general, the conference sector is growing, organisers say.

"There's plenty of activity and I know for a fact that this centre [the Dubai Convention & Exhibition Centre] is incredibly busy and increasingly busy," said Peter Rigby, the chief executive of Informa, the organiser of events in Dubai including Cityscape and Arab Health.

Mr Darkazally said that despite hotel business being down on expectations, it was still good.

"We are getting good business on the books. There's not a crisis. It has not gone to a level where we should all panic and worry."