Dubai hotel room rates fall but supply grows

Developers and hotel operators continue to add rooms in Dubai even as an increasing inventory weighs on rates.

The emirate had 14,385 rooms across 49 hotels in various stages of construction at the end of the first quarter, according to the consultancy STR Global. That represents 18 per cent of the total number of rooms under various stages of construction in the region.

“No hotelier likes to see the room rates come down, but as long as the occupancy is healthy, which is the case, the rates will come back,” said Guido De Wilde, the senior vice president and regional director for Middle East at Starwood Hotels and Resorts.

“We are also replacing the Russian market with China, India and Nigeria and other African and Asian countries. It’s going to be a volume game.”

IHG expects to open 10 hotels in the UAE accounting for 3,000 rooms, including a 250-room Staybridge Suites for long-stay guests and a 450-room Holiday Inn in Dubai World Central (DWC) in three to five years. It also includes two properties in Ras Al Khaimah, a property in Fujairah and two in Abu Dhabi, including an InterContinental Abu Dhabi Grand Mercure.

Also opening near DWC is a 750-room, three-star Studio M, a 400-room Millennium Dubai World Central for the upper-midscale corporate traveller, and a 150-room Aloft.

Accor is opening a 200-room three-star Ibis Styles on Al Mina Road, Jumeirah, in the second half of the year. It is a conversion of an office building into a hotel.

“By 2020, we want to double our presence in the UAE,” said Olivier Granet, the senior vice president for development in Middle East for Accor. The French operator currently manages 28 hotels in the UAE, with 17 in Dubai accounting for 5,000 rooms.

The Spanish operator Melia expects to open the Innside Dubai in the Jumeirah Lakes Towers complex this year, and the Melia Dubai Downtown Residences in 2018.

The 235 room dusitD2 in Dubai’s Tecom area and the dusitD2 Residence Al Manzel Abu Dhabi near the Corniche and Saadiyat Island are due to open next year.

While hotel operators feel the pressure on room rates, they are optimistic on the rise in tourist numbers for Dubai.

“There are 70 million passengers who use Dubai airport a year, but the tourist numbers are at 13 million, so the potential to tap them is huge,” said Pascal Gauvin, the chief operating officer for India, Middle East and Africa at IHG.

As hotels come to Dubai, some home-grown brands are also expanding abroad.

One to One Hotels, owned by the Abu Dhabi-based diversified company Al Husam Group, expects to open five properties in Saudi Arabia with four in Mecca and the other in the Red Sea town of Jeddah. All are expected to open by the end of this year.

Mecca is one of the key markets in the region with 5,936 rooms under various stages of construction across 10 hotels at the end of March, according to consultancy STR Global.

“The future of tourism lies in Saudi Arabia and the UAE,” said Philippe Harb, the chief operating officer at One to One Hotels.

One to One is also looking to expand in Morocco, Lebanon and the UAE. It has eight properties in the pipeline, with three in the UAE, two each in Morocco and Lebanon and one in Thailand.

Dubai-based CityBlue Hotels expects to open three new properties in Uganda by 2017, including one in the Albertine Basin, where oil has been discovered in Uganda this year.

Also based in Dubai, the seven-year-old operator Auris expects to open 15 hotels and hotel apartments in the UAE, Morocco, Saudi Arabia, Sudan, Oman and Turkey.

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