Hotels concerned that increased competition will hit summer trade

New Dubai hotels bring more rooms to the market

Hoteliers are concerned about increased competition from hotels opening in Dubai in the difficult summer months, despite signs of a recovery in the market. "It's very difficult to predict," said Christophe Landais, the managing director for Accor Hospitality Middle East. "The clients are booking at the last minute but we feel that it's going to be difficult, especially with the new supply that is coming up."

Mr Landais said Accor had added more than 1,000 rooms to the Dubai market over a six-month period last year, including the Ibis hotels in Al Barsha and Deira. "[Last year] was pretty tough for us," he said, adding that the hotels were running at occupancies above 80 per cent although room rates were lower. "The volume of business is there. To see that the activity is coming so soon in Dubai is a positive sign."

Accor opened another Ibis hotel in Dubai in March and recently opened a Sofitel at Jumeirah Beach Residence. The company plans to open its Pullman hotel at the Mall of the Emirates over the summer. Some of the unbranded hotels were suffering as branded properties opened in the city, Mr Landais said. Philip Barnes, the vice president at Fairmont Hotels and Resorts Middle East and the general manager at the Fairmont Dubai, said: "The challenge is how much supply is going to come on stream. How many of the projects that we have seen put on hold are going to open as the economy starts to recover?" Mr Barnes said the Fairmont Dubai was better prepared for the summer this year compared with last year.

"The summer is always a challenge for the destination but I have a reasonable level of optimism that we will see levels that are comparable to last year," he said. "Dubai is not a great destination for July and August, and Ramadan adds another dimension to that." Data from the Department of Tourism and Commerce Marketing (DTCM) showed that in the first quarter of the year, guest numbers increased to 2 million compared with 1.9 million for the same period in 2008, representing an increase of 5.1 per cent. Hotel revenues in the same quarter increased to Dh3.77 billion (US$1.02bn), up from Dh3.65bn the previous year. But these revenues were shared by a greater number of hotels.

Hotels opening in the city meant supply increased by 13 per cent to 64,143 rooms in hotels and hotel apartments, up from 56,755 in the same period last year. The number of guest nights in Dubai hotels was up 16 per cent. The latest revenues are down sharply compared with the peaks of 2008, when first-quarter results were well above Dh4bn. But the DTCM said it was working hard to drive more business to the emirate. "We're coming up with many initiatives such as kids go free," said Hamad Mohammed bin Mejren, the executive director of business tourism at the DTCM.

Mr bin Mejren said the fact that Dubai had become a lot more affordable as a destination was also helping to attract tourists. "We're working hard to fill the hotel rooms. I'm very confident in the travel and tourism industry," he said. [e-mail]