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Mon 8 Aug 2011 10:48 AM

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Dubai’s cut-price hotel rates ‘unhealthy’ for market

Hotels ‘losing’ on cheap rates in bid to fill rooms, says Khalaf Al Habtoor

Dubai’s cut-price hotel rates ‘unhealthy’ for market
Dubai has more hotels under construction than New Yorj, Berlin and Las Vegas

Dubai hotels have slashed room rates to “unhealthy” levels
and risk never being able to hike prices again during better economic periods,
the chairman of the Al Habtoor Group said.

Khalaf Al Habtoor, whose firm owns several hotels including
Dubai’s Metropolitan Palace and the Habtoor Grand Resort & Spa, said room
rates need to increase to cover operating costs.

“We are giving visitors very cheap rates in the hotels with
a lot of benefits. Really you lose on this pricing. People like to fill hotels
but this is really the wrong policy,” he said.

“If you go to Paris you will find the hotels from €800-1,000 and you go to London and the five star hotels will
be £500-800. You cannot find prices like here.”

Dubai has spent billions on transforming itself into a
global tourist destination. The emirate has more than 52,000 hotel rooms and is
home to iconic properties such as the flag-shaped Burj al-Arab and the first
Giorgio Armani-designed hotel.

The emirate attracted 8.3 million visitors in 2010 with
overall hotel occupancy in the first quarter 2011 - peak-season for Dubai - averaging
86 percent, according to Ernst & Young.

Real estate consultancy Jones Lang LaSalle said in June the
Gulf hotel market was set for a boom in mid-range hotels, spurring increased price
competition between rival properties.

The country has enough budget hotels to cater to tourists on
smaller budgets, said Al Habtoor.

“I think there is no cheaper than the ones we have now, it
cannot be cheaper. There is an advertisement on Sheikh Zayed Road [that offers
rooms] for AED99 – that is not even $30.”

Dubai has more hotels under construction than any other city
in the world, according to a report by hotel projects tracker,
tophotelprojects.com.

The emirate currently has a massive 97 hotels under
development and 35,154 rooms due to come online, more than rival destinations
New York (43), Berlin (49) and even Las Vegas (17).

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Andrius 9 years ago

in Paris you can find 5 star hotel with Eiffel Tower View for 1500 Dirhams. Dubai Hotels prices always were a bubble.

Same with malls. If you want really good sales better go to London. If you going to make big shopping it will be cheaper even with costs of tickets and hotels. And at least you will get new collections there. Those in Dubai coming only after one year.

Burj Khalifa and Burj Al Arab are not the reason to make unreal prices for all hotels in Dubai especially those which are located in a constructing site or in the middle of the desert...

Samantha 9 years ago

Supply & demand will dictate the price for hotels and every thing else.... whether it's 99 or 999

Paul King 9 years ago

Bubbles always lead to the mis-allocation of capital. This great correction is all about de-leveraging and the end of the world's greatest credit expansion. We live in very exciting times....the rule book is being re-wrote. Hope for the best and plan for the worst...Hotel room rates are going to exactly where they deserve to be!

Dubai fan 9 years ago

It is wrong to compare Dubai with London and Paris, they are completely different markets. In my view hotels in Dubai have always been over priced, particularly for the local market (with the obvious exception of the occasional deal). If you are European for example and want to spend 2 weeks on holiday, I would head to Asia where you can stay in amazaing hotels for a fraction of the price of a Dubai hotel. The second consideration would then be the price of F&B, and again, Asia would get my booking. Why would I pay $5 for a coke in JBR when I could pay 50c in Asia. In regard to the quote of GBP500-GBP800 for a 5 star hotel room in London; I assume this is for a 2 bedroom suite? It is very easy to get a 5 star hotel in London for GBP200

Dubai has wonderful hotels and of course tourism is very important, but if you want tourists to stay for more than a night, pricing needs to be sensible. Also, try and define seasons. It is frustrating to see a hotel 400dhs 1 week and 1200dhs the next!

Ali 9 years ago

Why should London and Paris be compared to Dubai? A large number of visitors to Dubai are mid income people and its better to compare prices to places like Istanbul, Singapore and Hong Kong. Good places in Dubai charges high prices like Emirates towers, Grosvenor, Jumeirah Beach, Royal Meridien. And old hotels with cramped rooms in Deira charge 300 dhs, which is fair enough. And the 99 dhs offer is for a hotel which is more like a hostel given that you have to pay extra fees for even pillows so bringing it up is irrelevant, its not as if people are getting nice rooms for 99dhs

Dubai resident 9 years ago

“If you go to Paris you will find the hotels from €800-1,000 and you go to London and the five star hotels will be £500-800. You cannot find prices like here.”

And you won't find many 1-3 star hotels in Dubai.

The issue about pricing may be true, but you will also find that 4-5 star hotels make up a small fraction of the total number of rooms in those cities, whereas in Dubai, I would guess they make up at least 70% upwards.

Stitch 9 years ago

Exactly, it's all about supply and demand.

And comparing Dubai to London or Paris - give me a break.

What exactly are tourists supposed to do in Dubai? Visit a Mall, er, visit a Mall, oh and visit a Mall.

Start investing in things other than hotels and people might start to come here and fill up these hotel rooms - giving you the profits you desire.

Dubai Land would be a start!