Dubai's hotel sector to grow further

Thousands of new hotel rooms are due to open in Dubai in the coming months, offering visitors even more options but putting more pressure on the already squeezed industry.

Thousands of new hotel rooms are due to open in Dubai in the coming months, offering visitors even more options but putting more pressure on the already squeezed industry. Most of these new properties were planned during a boom for the Dubai hospitality industry and a shortage of rooms in the emirate that boosted rates.

But since then, room rates and revenues have fallen steeply as the economic downturn dried up demand and fuelled a price war as hotels battled to attract guests. For the first half of this year, the number of hotel rooms in Dubai increased by 17 per cent to 58,147 compared with the same period last year when there were 49,656, according to Dubai's Department of Tourism and Commerce Marketing (DTCM). The current total comprises 40,943 hotel rooms and 17,204 hotel apartment rooms.

The new rooms will "place further pressure on occupancy and rates, particularly for those hotels in less popular tourist and business locations, and those which are not supported by a strong international brand or operating platform," said Jalil Mekouar, the executive vice president at Jones Lang LaSalle Hotels Middle East and Africa. But there may be a silver lining for hoteliers. The drop in room rates from their previously high levels helps make Dubai a more attractive destination in a tough world tourism market.

Among this year's openings, Address Hotels and Resorts, part of Emaar Hospitality, will launch two five-star hotels. The Address Dubai Mall, which will join the Address Downtown nearby, will add another 244 rooms to the market, while the Address Dubai Marina will provide another 200 rooms. "We expect that the hotels will launch to increased consumer interest and will be an added boost to Dubai's hospitality sector," said Marc Dardenne, the chief executive of Emaar Hospitality.

"The opening of the new hotels further proves that resurgence in the hospitality sector is evident." DTCM data suggest there was an increase in the number of guests in the first half, but figures for the first quarter showed a drop in hotel revenues and the duration of hotel stays. "On top of this tourism in the UAE will see more arrivals from the GCC and BRIC [Brazil, Russia, India and China] regions in the coming months, and Dubai's stature as an exhibition and business hub will contribute to more business tourism," Mr Dardenne said.

The Armani hotel, set to open at the Burj Dubai in December, will add 160 rooms. Rotana Hotels said it has three openings scheduled for Dubai in the coming quarter. The Rose Rotana will add 481 rooms to the market; the Centro Barsha will have 264; and the Amwaj Rotana will have 294 rooms. A new brand, Media One, is to launch in October with a 260-room hotel in Media City. The expansion is projected to continue. Another 10,984 rooms are forecast for next year, according to Lodging Econometrics, a US research provider.

Arshad Hussain, the director of business development at The Monarch Dubai hotel, said he is looking forward to better days, despite all the new competition in these trying economic times. "Next year is obviously going to be much better than 2009 as the world comes out of recession," Mr Hussain said. His bigger concern is that new unbranded properties would offer low rates in order to attract guests. That would "only spoil the market for everybody. That would only have a sliding effect for all the other hotels."

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