Building boom in Dubai not expected to put the squeeze on hotel room rates

Occupancy levels unlikely to be affected, according to consultancies.

Dubai's hotel building boom is unlikely to squeeze hotel room rates or occupancy levels, according to reports from two consultancies.

Average room rates in Dubai may increase by 4.7 per cent and occupancy marginally by 1.7 per cent over the next two years. In Abu Dhabi these are expected to grow by 2.7 per cent and 2 per cent respectively.

“A challenge is that supply is increasing rapidly, and it would be interesting to see how operators will deal with occupancy with such as extensive increase of supply,” said Alison Cashmore, the director of regional hospitality and leisure assurance lead at PwC Dubai.

Dubai would get an additional 10,000 rooms in the next two years. That is in addition to more than 84,000 existing rooms and hotel apartments.

Issam Kazim, the chief executive of Dubai’s Department of Tourism and Commerce Marketing, is not worried about the supply of rooms beyond Expo 2020.

“We are now targeting growth until 2020 to meet the demand,” he said. “After that Dubai continues.”

For Abu Dhabi, however, room rates have fallen in the face of increased supply for the fourth consecutive year.

“It is recovering, and government investment on the Corniche and everywhere else are driving the numbers,” Ms Cashmore said.

For both Dubai and Abu Dhabi, the demographic of the traveller will play a role in meeting the supply.

Dubai’s improving infrastructure is a major boon for the hotel sector, according to PwC.

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