By Courtney Trenwith
Dubai tourism boss insists the extra 80,000 hotel rooms to be built by 2020 won’t be left empty after the World Expo
Dubai’s tourism boss has insisted the emirate will not become “a ghost town” after it hosts World Expo 2020, defending plans to almost double the number of hotel rooms in the emirate.
Dubai is spending $8bn on infrastructure in the lead up to the international event and has announced measures to help developers produce about 80,000 new hotel rooms by the time of the Expo.
Dubai Tourism and Commerce Marketing (DTCM) director general Helal Saeed Almarri said the rooms would not be left empty following the event, which is expected to see 25m visitors during the six-month duration.
“None of these rooms are being built specifically for the Expo or any one event,” Almarri told Bloomberg.
“They’re being built purely because of the core tourism numbers. Dubai won’t turn into a ghost town after the Expo.”
DTCM announced last year it intended to double the number of tourists visiting annually to 20m by the end of the decade.
About 11m tourists visited last year, up 11 percent from 2012.
Tourism accounted for about 20 percent of gross domestic product in 2013 and is forecast to increase between 7-9 percent each year until 2020, Almarri said.
Dubai airport also is seeing record passenger traffic, with a 14 percent rise in 2013 and monthly figures now well over 6m passengers.
DTCM said earlier this month the number of hotel rooms and apartments at the end of 2013 was 84,534 at 611 establishments, compared to 80,414 rooms at 599 establishments in 2012.
Under the current development pipeline for 2014-2016 there will be an additional 141 hotel establishments added to the market, including 99 hotels and 48 hotel apartments bringing the total to 751 hotel establishments and just under 114,000 rooms.
“In order to provide accommodation for our targeted visitor numbers for 2020, we estimate we need a total of between 140,000 to 160,000 rooms and will work closely with the investment industry to make this happen,” Almarri said.
The range of hotel offerings, however, also needed to continue to expand to attract a wider market of visitors, the department said.
In September 2013 the government announced a concession on the standard 10 percent Municipality Fee levied on the room rate for each night of occupancy as an incentive for developers to bring forward construction timelines for three and four-star hotels.
This was followed by a series of directives from Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum in January this year designed to enhance and streamline hotel investment in the emirate.
The Tourism Dirham scheme also will come into operation from March 31 and is seen as a method of raising funds for the international promotion and marketing of Dubai and to drive the growth of its tourism and trade industries.
The fee will vary according to the type of hotel establishment.
At five-star hotels, the fee per occupied room per night will be AED20; at four-star hotels it will be AED15; and at three-star hotels the fee will be AED10.
The AED20 fee will also apply to deluxe hotel apartments. Superior hotel apartments will pay AED15 per occupied room per night and standard hotel apartments will pay a Tourism Dirham fee of AED10.
The lowest charge will apply to one-star/budget hotels and guest houses, which will be charged AED7 per occupied room per night.
With the sharp, opportunistic rise in rents across the emirate, Dubai may, in fact, become a ghost town long before the 2020. With no policing of rental hikes (meaning that landlords are loopholing their way to 25-100% increases) and pushing all tenants out. Tenants are being forced out of their homes and while moving around, in orbit, they are being forced to pay (as fresh new tenants) these exhorbatant prices that are based on nothing more than greed. Certainly not on any realistic pricing since the Expo is not a windfall of new rich migrants....only visitors in the future. I don't get it. The only "out of the ordinary" migration to Dubai and new "tenants" will be laborers here to build the expo facilities. How do landlords base their rents on this? Clueless and RERA is allowing it to happen without watchdogging this whole fiasco.
Supply and demand Mick....
I understand supply and demand but when the demand has been falsely generated by misenterpration of what an event like Expo 2020 brings. I remember the Expo 67 Montreal (well, the repercussions) and other than naming their baseball team after it and aging installations that were never visited after there was very little upward movement (as you can probably research to find the same with other expos). It may be a new thing for the Middle East and I'm ecstatic, everyday, to see the forward movement of Dubai in this regard. I have only been here for 6 years but even in those six years, seeing a 3rd of a Burj Khalifa (Burj Dubai at the time), no metro etc etc it has moved so fast but has the population boomed that much? I've been aware of more departures than arrivals and certainly not from the residential investment side. So, "not Mick"...how would you explain the criterium that would account for any justification of rents of, for one example, 60K moving to 110K in just one year?