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Tue 7 Dec 2010 09:10 PM

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Dubai needs 2.5m tourists to fill hotels, says Deloitte

Sheikhdom has spent billions of dollars to transform itself into an international tourist destination

Dubai needs 2.5m tourists to fill hotels, says Deloitte
Dubai, which has around 50,000 rooms, may struggle to maintain occupancy and rates as a further 30,000 rooms are likely to be added

Dubai will need to attract an additional 2.5 million tourists annually to absorb an estimated 60 percent increase in hotel rooms over the next five years, Deloitte LLP said.

Dubai, which has around 50,000 rooms, may struggle to maintain occupancy and rates as a further 30,000 rooms are likely to be added, said Alex Kyriakidis, the New York based consulting company’s global managing director of Tourism, Hospitality & Leisure.

The sheikhdom has spent billions of dollars to transform itself into an international tourist destination. It built the sail-shaped Burj Al Arab hotel and opened a 160-room hotel designed by Giorgio Armani in the Burj Khalifa, the world’s tallest tower. Horserace complex Meydan and Dubai Mall are also among the attractions that have been built.

Even if half of the expected construction is canceled, “15,000 rooms would be a fairly big increase for Dubai to absorb,” Kyriakidis said in an interview yesterday. The number of visitors will need to go up to about 12 million from 9.5 million now, he said.

Average hotel occupancy has fallen to 70 percent from 80 percent in 2007, while the revenue per available room is estimated at $240, down from $300 in 2007, according to Dubai based Kyriakidis.

InterContinental Hotels Group, owner of the Crowne Plaza and Holiday Inn brands, has several properties in Dubai. Kerzner International Ltd opened the Atlantis resort in November 2008, adding 1,500 hotel rooms at the foot of one of Dubai’s palm shaped islands. Jumeirah Group, the hotel management company owned by Dubai’s government, manages eight properties across the sheikhdom.

Hotels must work with airlines such as Emirates and Etihad Airways to develop packages that deliver lower prices for tourists from emerging markets such as China and India, he said. They should also try to attract some of the travelers who go through Dubai’s airport to other destinations. Traffic at Dubai International increased 15 percent to 4.01 million passengers in October, the airport operator said on November 24.

He said: “Dubai airport numbers are increasing at an exceptional rate, however one of every five people who land in Dubai comes into Dubai.”

If only a small percentage of the transit passengers stayed in Dubai, hotels would continue to have “very healthy” occupancy.

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MSM 9 years ago

80K rooms means, with 80% occupancy 23.36 Million tourists will be required every year or 64K every day. A Big number by any means!!!!! This is apart from those visiting friends and visitors. Hotels in Dubai are poised to have tough time for long time.

Frank Lampard 9 years ago

Not quite...23.36 million tourists if every person stayed for only one night. On average I reckon people stay for around 3 nights, but then you'd have to factor in couples etc sharing rooms.

Alan Campbell 9 years ago

Every one is trying to attract new clients, Las Vegas, China, India, Dubai. How many people can fit in to that pie? If the reports tell us that the numbers are not there, or wont be there for at least several years down the road, then why do we keep building 1200+ rooms hotels? The Cosmopolitan Hotel in Las Vegas will open the 15th of this month and are facing the same problem. CEO is optimistic that all will go well. City Center next door is still on a loosing streak, and the empty Harmon Building is an eye sore for this complex. I hope that Dubai will be able to attract the 2.3million guest that they need, and the next year how much will they need?

Sen 9 years ago

80k rooms at 80% room occupancy = approx. 3.9 million guests assuming 3 nights average LoS and average 2 pax per room.