Overnight guests in Dubai hotels rise 9.3%

Dubai hoteliers continue to add new rooms to accommodate rising visitor numbers. Sarah Dea / The National

Dubai attracted 8.2 million international overnight visitors during the first seven months of the year even as hotel occupancy dipped and the global economy slowed down.

That represents an increase of 9.3 per cent in visitor numbers over the same period last year, said Issam Kazim, the chief executive of Dubai’s Department for Tourism and Commerce Marketing.

The top source markets included India, Saudi Arabia, Oman, Germany, Iran and China.

Hoteliers continued to add new rooms to accommodate rising visitor numbers. Between January and July, 11 properties opened in Dubai, adding 2,600 rooms.

Among them were the 186-room Flora Al Barsha Hotel and 126-room Hyatt Place Dubai at Baniyas Square. At the end of July, there were 95,000 hotel and hotel apartment rooms in Dubai.

“This increase has inevitably triggered talks of oversupply, and while we at Dubai Tourism do not share this view, it does highlight an important view to strike a balance between supply and demand, ensuring that Dubai dictates a high occupancy rate [and] room rates that are neither too high nor too low,” he said.

“We are continuously working with all private and public sector departments to ensure Dubai’s inventory increases proportionate to our tourism needs.”

Despite the uncertainties of the global economy, Dubai’s key performance indicators are relatively stable, said Mr Kazim.

Last month, non-oil private sector firms in the UAE placed new orders thanks to strong domestic demands, according to the Emirates NBD UAE Purchasing Managers’ Index.

However, exports slowed and inflation rose.

During the first seven months of the year, hotel occupancy in Dubai was 77 per cent with the average daily room rate at Dh585. A key measure of hotel profitability, revenue per available room (revpar), was Dh450. The comparative figures for last year were unavailable from the tourism department.

“These are among the highest rates in the world, far outperforming other metro markets,” Mr Kazim said.

The hotel occupancy rate has dipped 0.9 per cent year-to-date until September 19 compared to the same period last year, according to STR Global. The average daily rate has declined 8.1 per cent as supply rose 6.3 per cent compared to demand at 5.3 per cent.

As the local market corrects the heavy reliance on luxury properties with the construction of more budget and midscale hotels, the average revpar in Dubai has declined.

The uncertainty in the global economy and currency weakness among key source markets such as Russia and the euro zone has had an impact on the tourism market.

Mr Kazim was talking at the three-day Hotel Show in Dubai. Demand is expected to outstrip supply of hotel rooms in Dubai in the run-up to 2020, pulling down occupancy rates from around 80 per cent, according to analysts.

Hotel operators have taken a defensive position, maintaining the occupancy rates broadly but at the cost of average daily rates, said Martin Cooper, an analyst with the consultancy Deloitte. “Occupancies around 73 to 79 per cent [would] be the new normal,” he said.

High land prices, especially in the Downtown and Business Bay areas and a lack of leisure attractions are among the challenges that hotel developers and operators face in Dubai. Once considered a shopping destination, Dubai has become more expensive to shop for many consumer goods because of the strength of the dollar, according to Philip Shepherd, an analyst with PwC.

“Attractions are limited to desert safaris, beaches and some waterparks, currently what we are missing are attractions,” he said. “I don’t think Dubai can do it on its own, the emirates need to do it together.”

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