By Andy Sambidge
Cluttons says oversupply of hotels is biggest risk to longer term success; 30,000 new rooms by 2014
Dubai's tourism market is likely to outperform its regional peers in the short-term as visitors see it as a safe haven amid the unrest elsewhere in the Middle East, Cluttons said on Monday.
The real estate specialists said in a new report that the emirate had seen occupancy levels similar to those prior to the global economic crash in 2008.
It added that an increase in affordability as a tourist destination had helped the city's recovery, which would continue in the short-term at least.
"Dubai's hotel sector has benefited from the Emirate's political stability within the Middle East region, with strong performance in occupancy levels and length of stay," the report said.
According to Ernst & Young, a total of 8.3 million visitors came to Dubai in 2010, with the overall hotel occupancy in Q1 2011, peak-season for Dubai, averaging 86 percent.
The Cluttons report added: "An increase in affordability as a tourist destination has clearly helped Dubai's comeback. Despite short to medium-term recovery risks; optimistic sentiment about local market conditions continues to increase with monthly occupancy levels showing Q1 2011 nearly matching Q1 2008 figures - which was pre-economic slowdown.
"The flexibility and consistent performance in Dubai's hospitality industry and other sectors has helped to reduce economists' fears of a double-dip recession in the UAE."
Steven Morgan, head of Cluttons UAE, said occupancy rates and lengths of stay have both seen "considerable growth".
He added: "However, to what extent Dubai's current performance is being buoyed by the recent political uncertainty in the region is not yet known and it is unclear how long this situation will continue. In the short term, Dubai seems likely to outperform in the tourism market this year."
Morgan said that with over 52,000 hotel rooms, Dubai can confidently cater to the 8.3 million visitors that passed through in 2010.
"However with 10,000 rooms to be delivered in 2011, and an additional 30,000 rooms in the next three years, the major downside risk for the sector in the medium to long-term still remains to be a case of oversupply," he added.For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.