Dubai hotel occupancy to slow

Rates at hotels depends on European travellers who have been hard hit by the economic slowdown, industry officials say.

DUBAI, UNITED ARAB EMIRATES - May 8:  People line up for passport control in the arrivals section at the Dubai International Airport on May 8, 2008.  (Randi Sokoloff / The National) *** Local Caption ***  RS014-DXB.jpgRS014-DXB.jpg
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Dubai is likely to experience a sharp decline in hotel occupancy rates because it depends on European travellers who have been hard hit by the economic slowdown, industry officials said. Occupancy rates fell for the first time in five years in August, according to a worldwide survey by Smith Travel Research, an industry consultancy. "Markets like Dubai, which are dependent on a lot of European travellers and have a large number of new hotels, will be hit hardest," said James Chappell, the company's managing director. The industry has responded to lower occupancy by increasing room rates, which has protected margins in most regions; the US, however, suffered declines in both occupancy and profitability. "We see a trend of declining occupancies and growing room rates across the world," said Mr Chappell. "While performance in each region is influenced by different factors, the worldwide economic slowdown has started to take its toll on the hospitality industry." Many hotels in Dubai have yet to witness the decline, but are already reaching out to a more diverse pool of travellers to protect against a downturn in their traditional markets. "Our occupancy rates are still looking very healthy, but at the same time we know that the market here is not isolated from the rest of the world so that is why we are targeting tourists from more that one country to limit any damage," said Jeff Strachan, the area director of Marriott hotels in the Middle East and North Africa. The figures from the survey ofmore than 36,150 hotels comprising 4.93 million guest rooms showed that occupancy fell in all four regions in August. In the Middle East and Africa, occupancy stood at 72.9 per cent, down 0.5 per cent from the same month last year. The Middle East and Africa region ranked first worldwide in revenue per available room (RevPAR) growth. RevPAR increased 19.4 per cent in August versus 18.4 per cent a year earlier. The average daily room rate in the region stood at US$144.53 (Dh530.86) and RevPAR was $105.32. The declining occupancy tallied with the latest information on growth in travel bookings in the Middle East, which fell sharply in July and August, according to booking agents. The Americas witnessed the worst conditions of any region, with RevPAR falling 0.3 per cent in August to $73.74. Room rates increased three per cent to $108.79 while occupancy declined 3.2 per cent to finish at 67.8 per cent. The Caribbean sub-region, in particular, brought down the figures with an 11 per cent decline in RevPAR. "We have been lucky that our hotel has been closed for renovations this summer because the occupancy rates we have heard from the market are the worst this year," said a reservations manager at The Sandpiper hotel in Barbados. Wayne Capalidi, the president of Barbados Hotel and Tourism Association, said that "the worst is still to come" and he expected a slight drop in tourist numbers this year. "To overcome the problem we are increasing our ad and marketing budget by $5 million to reach $25m," he said, adding that hotels had already started offering visitors value packages and rates. "We don't want to drop the rates too much because the destination will then lose its value," Mr Capalidi said. Asia Pacific saw the highest growth in room rates and also the steepest decline in occupancy. In Europe, occupancy fell 5.1 per cent to 68.4 per cent, while room rates rose 5.7 per cent to $153.43, the survey showed.