Hotel room rates in Dubai could see a slight recovery in the second half of 2010, but are unlikely to return to their pre financial crisis highs for a "long time".
Guido E. De Wilde said room rates will be bolstered by an improvement in occupancy, both of which witnessed sharp declines at hotels across Dubai last year amid the downturn in global travel.
"The occupancy in Dubai is still very strong. The (room) rates will go up, but when they will reach the rate levels of 2007 and 2008 - that is the question," De Wilde told reporters at a press conference in Dubai.
"It will all be driven by how strong the occupancy levels will be," he added.
Dubai hotels saw occupancy slump 10.2 percent to 69.4 percent in 2009, according to hospitality research firm STR Global.
Analysts say occupancy and revenue will remain under pressure in 2010 due to Dubai's exposure to the tourism sector and an oversupply of luxury accommodation.
Revenues per available room (RevPAR), an industry benchmark, plunged 31 percent to $163 in Dubai last year, the steepest drop of any Middle East city.
De Wilde said RevPAR at its hotels in the emirate fell about 24 percent in 2009. He did not give a figure for RevPAR in the first quarter.
"Going back to the room rates prior to the downturn is not going to be easy. It will take a long time to get to the same room rate level," he said.
It is forecasted that room rates may not recover in Dubai until 2012 as the market struggles to absorb the glut of luxury hotels set to come online in the next couple of years.
There are currently 28,153 rooms under construction in the UAE with a further 51,594 rooms in the pipeline, with Dubai accounting for the lion's share, according to STR Global.
"There are probably too many five star and luxury hotels in the area. There probably needs to be more three and four star hotels opened," De Wilde said, but added there is still demand for the high-end hotels.
