Dubai hotels expect 15 percent revenue surge

DUBAI – With international visitors to Dubai continue to grow beyond eight million by the end of 2011, hotels in the emirate are expected to see revenue per available room surge by eight to nine per cent in 2011, STR Global said in its latest forecast.

The steady stream of tourists is also expected to help boost demand growth of nearly 15 per cent for the full year, said the research firm that provides a single source of global hotel data.

The new hotel room supply growth in 2012 is expected to reach 9.6 per cent, causing both rate and occupancy to slow down, STR Global said.

Pipeline data from STR Global indicates that 13,000 rooms are under construction in the emirate with another 21,000 announced.

Demand growth in Dubai’s hotel industry was up 16.5 per cent year-to-date August compared to the previous year. However, demand growth in terms of total rooms occupied and new hotel supply were unequally spread between all six segments tracked.

The research report said the luxury/upper upscale segment, which rose by 17.6 per cent, led hotel room demand growth in Dubai. Moderate new hotel supply grew by 9.4 per cent, resulting in average room rate growth by 3.1 per cent to Dh940.87. In contrast, the midscale/economy segment experienced the strongest new supply growth of 11.3 per cent year-to August compared to the previous year.

“Branded economy and midscale hotels have been growing in the past few years as Dubai diversifies its hotel offering, which was until recently focused mainly on upscale to luxury segments. The additional new supply in the midscale/economy segments combined with slightly lower demand than the market resulted in an average room rate decline of 2.7 per cent and the lowest absolute level of occupancy at 69.0 per cent,” STR report said.

“The Dubai hotel market has managed to leverage its strategic location as a hub between continents and was valued as a safe destination during the Arab Spring”, said Elizabeth Randall, managing director of STR Global.

“In addition, modern infrastructure, new hotel inventory and delayed openings have allowed the market to balance supply and demand. This is good news for hoteliers who can now build their occupancy and rate.”

CB Richard Ellis recently ranked Dubai among the top 10 most popular business locations in the world with more than half of the biggest global conglomerates operating offices in the city.

The rankings compared global cities by the number of international firms operating offices there, using 280 companies as a benchmark. Of those companies profiled, just over half (56.1 per cent) have an office presence in Dubai ranking it in ninth place overall, while the UAE as a whole was ranked 15th in the country ranking, with 171 companies present (61.1 per cent).Despite the regional unrest, Dubai hotels have been reporting brisk occupancy rates over the past months.

Dubai’s international visitor spend is expected to surge 24 per cent to $7.8 billion in 2011 from $6.3 billion in 2010 and $5.2 billion in 2009, while Abu Dhabi expects to see an increase of 15.5 per cent in international visitors with the total tourist spend surging 21.8 per cent to $2 billion this year.

The UAE recorded the largest number of new hotel rooms under way in the Middle East and Africa region, according to latest data. The UAE continued to post the largest number of rooms in the total active pipeline with 40176, followed by Saudi Arabia with 5,531 rooms.