Movenpick sees Dubai facing 2010 hotel oversupply

Hotel group director says emirate is set to open 7,000 additional hotel rooms next year.
Movenpick sees Dubai facing 2010 hotel oversupply
DUBAI OVERSUPPLY: An additional 7,000 hotel rooms are due to open in the emirate in 2010.
By Gemma Greenwood
Wed 04 Nov 2009 12:45 PM

Dubai will face an oversupply of hotel rooms in 2010 as an additional 7,000 rooms across 18 properties are due to open, a senior hotel figure has said.

Guy Epsom, business development director for four of Movenpick Hotels & Resorts’ upcoming Dubai properties, said market conditions in 2009 were such that hoteliers would still be suffering the effects in 2010.

In comments published by Hotelier Middle East, he added that the additional 7,000 rooms set to open in Dubai next year would only add to the problem.

“In 2009 there has been a correction due to the economic downturn forcing people to change the way they worked in the past and to alter rate strategies to keep pace with the market,” he said, noting that average daily rates (ADRs) had dropped to as low as AED320 at some properties on Sheikh Zayed Road in September.

“The situation is that you haven’t had the bounce back in the market [required to help fill rooms in the new hotels], although confidence is coming back worldwide.”

He said corporates were still sticking to tight travel policies and that leisure customers were still looking for deals and booking last minute.

However, he said he remained confident that the Dubai market could cope with the over supply of rooms in 2010.

Epsom noted that on the plus side there were many new air routes opening up – by both traditional and low-coast carriers - that would generate new or bigger source markets.

“Our big advantage is that we are absolutely inundated with available air seats and that there are so many airline routes are open to us,” he said.

“Low-cost airlines such as Air Arabia and flydubai also need to be exploited.”

He added: “As general construction increases, the market becomes more liquid, plus you also have to remember that the hotel stock in Abu Dhabi is not yet high enough [so we can help fill that gap]."

Movenpick will open four Seven Tides owned properties in 2010 - Mövenpick Hotel Deira; Oceana Hotel & Spa; The Royal Amwaj Resort & Spa; and Ibn Battuta Gate Hotel – which will add more than 700 hotel rooms into the Dubai hotel mix next year.

Epsom also stressed that more than ever, Movenpick’s hotel sales teams needed to be “organised, strategic and aggressive”.

“We need to work on carefully thought-out price strategies, exploit new markets (citing China, the CIS countries, Scandinavia and Asia), explore new air routes and develop online business,” he said.

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