Dubai hotels are seeing weaker revenues this year as fewer visitors and an increase in the number of hotels opening their doors weigh on the seaside emirate's once-booming tourism sector, consultants said on Wednesday.
Revenue per available room (RevPar), an industry benchmark, for Dubai hotels dropped 35 percent to $217.5 in February from $333.5 a year earlier, according to the recent STR Global Hotel Survey.
Dubai, one of seven emirates in the UAE federation, gets 19 percent of gross domestic product from tourism and its economy stands to suffer as fewer people holiday during the global economic crisis and retail sales and trade flows decline.
Dubai sparked a construction boom when it first allowed foreigners to buy property in 2002. Luxury resorts, hotels, serviced apartments and holiday villas mushroomed, leading to 6.95 million tourists in 2007. Many of those planned hotels and apartments are opening their doors now as economic growth slows.
"There were so many properties coming on board even if the general slowdown hadn't been so strong ... you can't do that forever," Robert O'Hanlon, tourism, hospitality and leisure partner told news agency Reuters.
Dubai, home to the world's tallest building, is suffering a sharp downturn in real estate prices and scores of expansion projects have been shelved, leading to thousands of job cuts.
Arthur de Haast, told Reuters oversupply and falling demand was likely to weaken hotel performance this year.
"Overall the performance of hotels will decline in 2009 and will probably at best stabilise in 2010 and we won't see recovery in growth until probably 2011," said de Haast.
The emirate's annual shopping festival, first held in 1996 and which draws tourists from around the world with a month of discounts, had its budget cut this year and shifted focus towards attracting visitors from neighbouring Arab countries and India and away from recession-hit Europe, organisers said.
Statistics from Dubai's international airport show passenger traffic still rising - by 2 percent in the first quarter to about 9.5 million.
But other measures suggest tourism is falling. Preliminary data from Dubai's Department of Tourism showed hotel occupancy rates fell 14 percent year-on-year in the third quarter of 2008, the most recent figures available.
