Dubai has the largest hotel pipeline in the Middle East, but the influx of new rooms into the market should not be viewed as a source of concern, but rather an opportunity for the emirate to attract more guests in the wake of the recession, a Dubai tourism official has said.
According to a report released this week by STR Global, Dubai's hotel pipeline as of April leads all cities in the Middle East by a wide margin in terms of number of rooms in the total active pipeline (32,753) and in the In Construction phase (16,539). By comparison, Abu Dhabi, the next most active market in the Middle East, has 14,558 rooms in the total active pipeline and 7,849 rooms in the In Construction phase.
Some experts have expressed concern about the large amount of supply coming online in Dubai, especially in terms of its impact on revPAR (revenue per available room). However, tourism officials in the emirate have voiced optimism that the influx of new hotels will be a good thing for the industry.
Speaking at the Hotel Show in Dubai last week, Khalid bin Sulayem, director general of Dubai Tourism and Commerce Marketing Department, said that new supply will lead to lower room rates, which will help make the emirate more competitive as a tourist destination. 'There are between 16,000 and 20,000 hotel rooms to enter the Dubai market by the end of the year, which will contribute to producing lower room rates and attracting more visitors to Dubai,' he said.
Also downplaying concerns about the potential harmful effects of oversupply in the emirate was Ray Tinston. He argues that the rise in occupancy that is likely to occur as rates fall in the emirate will help to provide other revenue opportunities for hotels. 'Originally when these projects were conceived, the regional hospitality industry was booming. The projects were being built to satisfy future demand,' he said. 'However with the global economic downturn still clearly evident and further worries about a double dip recession, hotel owners and operators are now looking at the situation philosophically.'
If the region is to compete globally revPar rates need to be competitive. That could still benefit hotel revenues. By increasing occupancies at slightly lower rates, operators can still capitalise on the peripheral food and beverage spend,' he added.
Business travel rebounds:
While the benefits of the massive supply of rooms coming online in the emirate can be debated, a new poll issued last week perhaps offers a more tangible ray of hope for the hospitality industry in the region.
The latest Travel Tracker found that business travel budgets in the UAE are beginning to expand as the financial downturn recedes. The poll, which surveyed 261 business and 349 leisure travellers from the UAE during April, showed that diminishing business travel budgets appear to be 'largely behind us'.
Fewer than one in four (24%) people who travel for business said their budgets had decreased in the past year. This compared to 47% in April 2009 when budgets were at their lowest as the global credit crisis was in full swing. Looking ahead, nearly half (45%) of business travellers expected to travel more in the next 12 months. While 60% of travellers said they expected budgets to grow or remain the same over the coming year.
A similar positive trend was seen in the survey for leisure travel, with nearly three-quarters (71%) of leisure travellers saying their travel will either stay the same or increase in the next year. 'Travellers feel optimistic that the worst of the recession may be behind us,' said Scott Booth, research manager for Travel and Tourism. 'Their optimism is reflected in the expected increase in travel for the coming year.'
