Property slump 'biggest challenge' for Dubai hotels

Hotel group chief says hoteliers will continue to feel impact of real estate crash.
Property slump 'biggest challenge' for Dubai hotels
By Joanne Bladd
Wed 20 Jan 2010 03:16 PM

The president of Fairmont Hotels & Resorts has branded the collapse of Dubai’s real estate industry the “single biggest challenge” facing the emirate’s hospitality industry.

In the peak of the property boom, the engine of Dubai’s economy, hotels leaned heavily on its custom to fill their rooms and were left with few alternatives when the real estate market slumped, said Thomas Storey.

“I think the single biggest challenge this destination has right now, is that a lot of the business of this destination was driven by real estate...and all of the follow-on business associated with that, you know, all of the designers, all of the architects, all the engineering firms, all the heat, light, gas. When that started dialling back, unfortunately Dubai doesn’t have a lot of other industries to fall back on,” he said.

RevPAR at the Fairmont Dubai, a figure reflecting a hotel’s average daily room rate and occupancy, was down more than 25 percent in 2009, he said.

“I think we’re still feeling it [the real estate crash] and I think Dubai will feel it for a while.

“My concern about Dubai has always been, ‘does it end up not having enough runway?’ In other words, you get to a point where you’ve got to start diversifying that business base in a way that, if you have a shock to one segment, you’ve got other segments to fall back on.”

Last week, it was report that the UAE would see a recovery in tourist numbers this year with arrivals picking up even further in 2011.

In its latest report on the country's tourism prospects, Business Monitor International said they were upbeat about the sector long-term, despite being hit last year by the effects of the global economic downturn.

It said although it maintained a "rather poor outlook for the UAE in the short term", it saw visitor numbers rebounding this year and next, without giving specific numbers.

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.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.