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Wed 19 May 2010 07:36 AM

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Dubai hotel room rates seen falling as supply rises

Dubai tourism chiefs says up to 20,000 new hotel rooms set for emirate in 2010.

Dubai hotel room rates seen falling as supply rises

Up to 20,000 new hotel rooms are set to come online in Dubai this year, resulting in a drop in room rates, a senior tourism official in the emirate has said.

Khalid bin Sulayem, director general of Dubai Tourism and Commerce Marketing Department (DTCM), said the introduction of new supply would also help to attract more visitors to Dubai.

Speaking at The Hotel Show, he said: "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."

His comments came as Dubai-based research company, Proleads, reported there are currently more than 470 active hotel projects in the GCC.

The UAE leads the way with 258, while Saudi Arabia has 83, Oman 39, Bahrain 35, Qatar 29 and Kuwait 27.

"Originally when these projects were conceived, the regional hospitality industry was booming. The projects were being built to satisfy future demand, said Ray Tinston, sales director, The Hotel Show.

"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."

A recent Deloitte analysis of STR Global hotel data revealed that revenue per available room (revPar) rates in the Middle East were estimated at $131.42 during the period year-to-date February 2010, compared to $151.51 during the corresponding period in 2009.

These figures however are considerably higher than other regions in the world.

"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," added Tinston.

"The Proleads figures show estimated cash expenditure this year on hotel projects under construction across the GCC will top $1.17 billion and the number of active projects is actually accelerating by 11.4 percent," added Tinston.

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