| 30 Jul 2006 |
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Dubai hotel industry faces downturn with less than buoyant summer trade
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DUBAI -- Dubai's hotel industry could be beginning to see the start of a slowdown with summer trade less buoyant than expected. According to hotel operators, analysts and estate agents, hotel occupancy rates are lower than anticipated and where they have remained high it is often because room rates have been slashed.
This is confirmed by a spokesperson at the Sheraton Dubai CreekSheraton Dubai Creek
, who said this summer's trade "was not as successful as last year's, may be because people are going to Europe and Asia." She added that occupancy rates had not changed that much -- there had still been some days with 100 per cent occupancy -- but that room rates are much lower. This means that the average room rate, known as RevPar, could slip for this period across Dubai.
Sales and marketing executives at Grand Hyatt DubaiGrand Hyatt Dubai also said that they had heard that demand for hotel rooms across Dubai was generally below expectations but that, fortunately they had not been affected. "Sales have met our expectations this year," said director of marketing, Sven Hoffmeyer.
The worsening crisis in Lebanon is also said to be impacting demand for hotel rooms and for short-term rental apartments, although the exact effect is still unclear. As operations manager of TRI Hospitality Consulting, John Podaras, said, "It is too early to tell what the long-term implications will be." He added, however, that as a result of the crisis there had been a resurgence of interest in destinations such as Cyprus and Dubai. This could be because people are diverting scheduled holidays away from Lebanon and Israel. Hotels, he said, have been having a "thin time of it. June was soft and July has picked up a bit".
"Summer has hit everyone," said short term rentals manager at Better Homes, Amina Harris. "Occupancy is far lower for hotel apartments too." Better Homes set up this part of the business last September and achieved 80-85 per cent occupancy in May. This has slipped to between 60 and 65 per cent, she said. She described the market as "fragile" especially with the Lebanon crisis.
"The short term impact is that families are moving here." She said companies are relocating to Dubai from Beirut, as they did during the Kuwait war. But she also said that a hot European summer seemed to be putting Europeans off coming here, as could be the war in Lebanon. The fact that Dubai is becoming a "construction site" could also be having a negative impact, she suggested.
Not everyone agrees that demand is slow. "We have seen a 50 per cent increase in demand for short-term rentals from mid-July," said owner and managing director of The Holidays Shop, Themos Papolas, who lets out furnished apartments and villas, primarily to the corporate sector, for an average one month stay. He said the rise in demand was "due to people diverting from Lebanon and Israel because of the war," and that there was an increase in the number of Lebanese families coming here, often to join families already living here. "All properties are fully booked until the end of October, and we'd normally expect less people in Ramadan," he said.
Business development manager at Al Morooj Rotana Hotel and Suites, Hatem Salem, also said that the demand for furnished apartments remains high. "There is high occupancy all year round," he said, "with occupancy rates for apartments at 98 per cent". The occupancy rate for hotels along Sheikh Zayed Road is in the 70 per cent range. He said there continues to be good demand from the GCC market, especially from Saudi Arabia and Kuwait.BY LUCIA DORE (Senior correspondent)
© Khaleej Times 2006
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