Hotels being built in Dubai are on average the largest in the world, overtaking Las Vegas, according to a report. The average project size for hotels in Dubai is 417 rooms, compared with 402 rooms in Las Vegas, Lodging Econometrics, a hotel property research firm based in the US, said yesterday.
Many of these projects would have been planned as Dubai's hotels thrived in a time when there was a shortage of rooms. "They were meeting demand and the financing was available at the time that the projects started construction," a spokeswoman for Lodging Econometrics said. But revenue per available room has fallen sharply this year as hotels cut rates to increase occupancy in a price war sparked by dropping demand and a higher number of rooms.
The number of hotel rooms in Dubai increased by 17 per cent in the first half of the year to 58,147 compared with the same period last year, when there were 49,656, according to Dubai's Department of Tourism and Commerce Marketing (DTCM). Analysts have said they expected to see revenues and occupancy levels come under further pressure as new hotels opened in Dubai. The emirate's room rates have fallen from exceptionally high levels so its hotel revenues are still at relatively decent levels compared with other cities.
Dubai is aiming to attract 15 million visitors a year by 2015, which is almost double its current visitor level. The emirate would need more hotels to cater for that target. Among new hotel openings in Dubai next year, Movenpick will launch four that are being developed by the Dubai-based independent holding company Seven Tides. They include the Royal Amwaj on the Palm Jumeirah, which has more than 740 rooms and residences, and the Ibn Battuta Gate hotel, which has 396 rooms.
Dubai still has in the pipeline 113 projects, or 47,142 rooms, representing 32 per cent of all guest room development in the Middle East, according to the second-quarter report by Lodging Econometrics. "Because of the great number of projects seeded earlier in the decade, new openings in the Middle East are set to reach historic highs over the next two years," the report stated. But the number of hotel projects being planned now has slowed due to the global financial crisis.
"At 477 projects, or 145,786 rooms, the Middle East pipeline has fallen 16 per cent and 11 per cent respectively from the second-quarter 2008 peak," the report said. This would lead to a sharp drop in new openings after the next two years, the company said. It said 53 per cent of the new projects were already under construction. In its report for the first quarter, the company said Dubai saw nine projects cancelled, six of which were under construction.
Lodging Econometrics said it had lowered its forecasts for the Europe, Middle East and Africa region "due to the recessionary declines that continue to impact the lodging industry and project totals in the pipeline". rbundhun@thenational.ae