Hoteliers see a brighter future

Atlantis hotel doubled its room rates to Dh1,680 a night, a sign that the hospitality industry may be on the way to recovery.

Dubai hoteliers are feeling more optimistic about the future as the slow summer season comes to a close. Atlantis, the flagship resort on The Palm island in Dubai, doubled its rates overnight last week from the promotional offer of Dh800 (US$217.80) which it ran throughout the summer, according to the hotel's website. Room prices from September 20 to December 25 are now at Dh1,680 per night.

Business chiefs said the hospitality industry may have turned the corner after months of falling occupancy and room rates. "Hopefully for Dubai, summer is a turning point," said Arshad Hussain, the director of business development at the Monarch Dubai, a hotel on Sheikh Zayed Road. Although seasonality is a major factor in the price hike, hotels are seeing some signs of improving business following falls in rates and occupancies this year caused by a decline in demand combined with new hotel openings.

Dubai hotels responded to the slowdown by launching deals and stepping up their marketing efforts and these started to pay off in July. Data for that month indicated Dubai saw a 24 per cent fall in revenue per available room, the key measure of the health of the industry, compared with falls of more than 40 per cent earlier in the year. "We believe there's room for optimism," said Jeff Strachan, the area director of sales and marketing for Marriott, Middle East and Africa. Marriott operates six hotels in Dubai, with management agreements for a further nine.

"The forward booking trends are looking healthy for the last quarter," he said. Coming major events in Dubai, which include Cityscape, the air show and the Race to Dubai golf tournament, as well as the Formula One Grand Prix in Abu Dhabi, would drive a huge amount of business to Dubai hotels, Mr Strachan said. "Room rates this November may even be a bit higher, or close to, November last year just because of everything that is going on," he added.

"If we look at the first eight months of the year we've had to bring our rates down to compete in the market. But, moving forward, events are going to continue to drive business in Dubai. There are going to be times of the year when business is good." The five-star Monarch Dubai is increasing its rates from Dh750 to Dh1,299 and is almost fully booked for some major exhibitions. "The market is coming back, there is no doubt about that," said Mr Hussain. He said those hotels which had not dropped rates too low stood to benefit.

"The rates are still down substantially on last year but the occupancy is coming up," he added. "Rates in the region were on the high side but now the market is correcting itself." Consequently, although Dubai's rates have fallen, they remain at relatively high levels compared with other cities around the world such as Mumbai and Singapore, according to data from Expedia's Hotels.com which was released last week.

Mr Hussain said the Monarch would now need to increase its rates gradually without falling into the trap of raising them to unsustainable levels. Thousands of new rooms opening in Dubai in the coming months are expected to keep prices in check. Mr Strachan said: "I would definitely say the market has now readjusted itself and is going to be extremely competitive for everybody, moving forward forever.

"We're back to a normal market, so it's just like operating hotels in any normal city in the world which is a very competitive environment. "However, there are lots of reasons to be grateful for doing business in Dubai." [e-mail]