Tourism placed for quick recovery

Despite the challenges the hospitality industry in Dubai faces, it will bounce back faster than most destinations, says a senior official

Dubai tourism is facing its most challenging year ever but is well placed for a faster recovery than other destinations, an official from the emirate's Department of Tourism and Commerce Marketing (DTCM) said on Sunday. The sector, which accounts for one fifth of the emirate's economy, has been hit hard by the global downturn, with occupancy and profitability levels dropping. But the authorities have fought back with a multi-million dirham marketing campaign and lower prices to attract visitors. "We strongly believe that Dubai may emerge faster than other regions when the global economy improves," Hamad bin Mejren, the executive director of business tourism at the DTCM, said at the Arabian Hotel Investment Conference (AHIC) in Dubai. "Dubai has invested heavily in the tourism sector and is better placed to remain sound during the challenging time." The emirate's tourism and hotel sector accounts for 19 per cent of Dubai's GDP, but indirectly contributed 32 per cent of economic activity last year, up 2 per cent on 2007, Mr bin Mejren said. The DTCM launched a Dh50 million (US$13.6m) three-month campaign in March to bring tourism opinion makers to the emirate on familiarisation tours to help dispel negative perceptions of Dubai. The Keep Discovering Dubai campaign would help "in creating awareness of the solid strength of the tourism industry and highlight the dynamic vibrancy of the destination", Mr bin Mejren said. "It has all the infrastructure and it's all ready to go, so when its source markets start kicking back - particularly Europe, the UK - then it is well placed to take advantage of that and it has got the available rooms," said Max Cooper, the executive vice president of Jones Lang LaSalle Hotels. "Dubai keeps building more reasons to come to Dubai... so from a leisure point of view, or whether it be a more business point of view, then Dubai is really well placed to take advantage of those economies when they do kick back." Mr Cooper added that the emirate had more rooms than many other markets and was continuing to increase its number of hotels. This, he said, could continue to affect occupancy and revenue levels. Dubai's hotel revenue per available room (REVPAR), a key index for the industry, dropped from $318 in the first quarter of last year to $203 in the first quarter of this year due to an increase in the number of hotel rooms and a reduction in rates to boost occupancy levels, according to STR Global. The market researchers said premiums that hotels were able to charge in Dubai's Jumeirah Beach area had dropped from Dh1,300 last March to Dh500 this year. The Dubai-based Jumeirah Group, which manages the Jumeirah Beach hotel and the iconic Burj Al Arab, has cut staff working days by tens of thousands this year by offering voluntary unpaid leave to cut costs, the company said at the conference. "We have saved something like 20,000 man days in terms of colleagues taking unpaid leave on a voluntary basis," said Gerald Lawless, the executive chairman. "This has worked very well for us and we will continue to do this throughout the year." Mr Lawless said Jumeirah Group had been forced to cut rates due to the economic downturn, but said occupancy levels were soaring, with the Madinat Jumeirah at 96 per cent last month. Analysts have expressed concerns over room-rate discounts, noting that once rates have been slashed it takes years for them to recover. Mr Lawless said the company would be reluctant to cut rates at its flagship Burj Al Arab hotel. "The Burj Al Arab, we are saying yes, it is unique, and we will hold out on rates," he said. "We can see then how the REVPAR balances out in terms of lower occupancy but still very high room rates." Sultan bin Sulayem, the chairman of Dubai World, who was presented with the AHIC leadership award, said Dubai's tourism investment and development had inspired other parts of the Gulf, but he did not see other Gulf states as competitors. "There is no way, if there is growth in our tourism, that it is going to be at the expense of tourism in Saudi or Bahrain," Mr bin Sulayem said. "The more tourism attractions in the Gulf, the better for Dubai. If we are the only attraction, then the growth is not going to be as much." Mr bin Sulayem added that Abu Dhabi's development plans would also prove beneficial for Dubai. "For us, this is added tourists." [e-mail]