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Mon 29 Dec 2008 12:49 PM

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Middle East hotels chief warns of tough 2009

Millennium, Copthorne hotels chairman predicts occupancy rates in Dubai will drop.

Hotel occupancy rates in Dubai will drop next year as travellers cut their holiday budgets, a Gulf-based entrepreneur has claimed.

Ali Hamad Lakraim, chairman and founder of the Lakhraim Business Group, told Arabian Business that some hoteliers should prepare for fewer bookings in 2009.

“Dubai will slow down with room rates suffering a little,” he said.

Lakraim, whose interests include the Millennium & Copthorne Middle East Holdings hotel chain, added: “There is a slowdown and 2009 will be the year when people look at their books.

“Hotels will have to share part of that slowdown because it’s all linked to travel and business. Leisure travel will be the first to be cut from everybody’s budget as it’s not a necessity.”

Other hotels in Dubai’s prime locations, such as beachside resorts or ones near the airport and Sheikh Zayed Road, will continue attracting healthy numbers, according to Lakraim.

He also believes hoteliers in Abu Dhabi will fare better than their Dubai counterparts next year.

Lakraim said demand from corporate travellers and limited room numbers will boost the UAE capital’s hotel industry.

The government’s ongoing strategy to promote Abu Dhabi and Etihad Airways’ continual growth is also expected to help.

Beyond the UAE, Lakraim believes hotels in other cities will not suffer like Dubai.

“If you look at somewhere like Riyadh, it doesn’t have many hotels so occupancy rates will probably be better there than somewhere like Dubai,” he said. “Beirut, for example, is affecting Dubai’s numbers because holiday visitors such as the Saudis and the Kuwaitis are going there instead,” Lakraim added.

Lakraim also urged hotel general managers to avoid drastic measures such as slashing rates if the going gets tough in 2009.

“General managers are enemies to themselves because they create hotel panic across the world when they drop rates,” he said.

"It doesn’t add anything extra to their books, it only reduces their income.”

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Disgruntled 11 years ago

All fair and good to say that General Managers shouldn't 'slash rates' in Dubai and cause 'hote panic across the world'... but this is assuming that Dubai hotel prices have anything to do with the rest of the world. When I can pay 49 Euros to stay in a nice Novotel in the centre of an historic city in Europe which is run by competent staff who know how to handle situations, know how to smile at a client, and know how to discuss options rather than just say 'no' to the client... why should I pay 89 Euros to stay in the new and pretty much character-less Novotel at the Dubai WTC where the staff don't speak much english, the managers are never around because they are too busy wallowing and the counter staff only know the word 'no' when asked a questions anywhere beyond the standard Q&A. Sure the Novotel may not be a resort, but the resort prices are ridiculously over-inflated as well. It is about time that Dubai come to the realisation that it is not immune to world fluctuations, that it does need to fit in with the rest of the world's economies. At the moment Dubai still holds a certain fairy-tale quality to the overseas traveller... Untill now people were willing to pay 'that little extra' to experience it. But those times are gone. People will see that prices for hotels and other tourist attractions, which are more than just glitz and glamour and NEW, are more affordable, and in the long run more interesting... and they will stop falling for the 'arabian dream' sales pitch. If the hotels in Dubai really want to keep their occupancy rates up, and this is well and truely possible, then they SHOULD look at lowering their rates to a more rationally understandible level on rooms, services, food and drinks. This will be a more sustainable approach in the long run... But then who am I kidding... what hotel manager is here 'for the long run'? They are here to make their money and get out... just like a huge percentage of the rest of the expats. Welcome to the real world Dubai. Be prepared for a harsh landing.

Carlos 11 years ago

I stay many times in Dubai and agree with your analysis very much. But it seems Dubai is not willing to learn, because all they became greedy and arrogant !