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Dubai's hotel sector demonstrates resilience with 11.1% CAGR in forecasted inventory

By Wam

Dubai’s diverse and vibrant hospitality sector is forecast to experience strong, sustained growth over the coming years, with occupied room nights set to reach 35.5 million annually in 2019, representing a robust 10.2 percent compound annual growth rate, CAGR, over the next 24 months.

According to a comprehensive study of the market by Dubai’s Department of Tourism and Commerce Marketing, Dubai Tourism, the emirate’s room supply is set to reach 132,000 by the end of 2019, growing at a 2-year CAGR of 11.1 percent.

Occupancy levels are forecast to remain at an extremely healthy 76-78 percent despite growth in capacity, maintaining the attractiveness of the sector to hotel investors and developers. The strong competitiveness of the sector is set to continue to be fuelled by increases in Dubai’s growing international overnight visitation and targeted increases in length of stays, supported further by recent and upcoming tourism attractions and experiences. With concerted efforts to raise awareness in both established and emerging source markets, the duration of travel from new and existing segments are expected to see further growth in the medium term, positively impacting demand for room nights, which is in turn expected to outpace visitor growth over the coming 24-48 months.

Helal Saeed Almarri, Director-General of Dubai Tourism said, "Dubai’s hotel industry remains at the forefront of cross-sector efforts to drive tourism growth, as we collectively work towards realising our Tourism Vision and enable our 2020 goals. Dubai’s position as the fourth most visited city in the world, and the consistent growth in overnight visitation, has been achieved in large part thanks to the efforts of our committed stakeholders in the domestic hotel and hospitality sector. With international and local investors, and operators continuing to actively pursue opportunities in Dubai, we expect to see not only sustained growth in inventory in line with our projected demand for occupied nights, but also further diversification across various asset classifications, to ensure that as a city we are the most globally competitive in providing our visitors the optimal range of options that cater to their preferences across the spectrum of hospitality offerings.

"Driven by the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, we will continue to work with stakeholders and partners across the public and private sector to ensure the hotel industry and the overall tourism sector are aligned with our strategic aspirations to be the most visited, recommended and revisited city in the world, and consequently deliver our objective to build and sustainably grow aggregate sector contribution to Dubai’s GDP."

At the end of 2017, Dubai’s hotel inventory stood at 107,431 rooms, with growth of four percent over the course of the year, and occupancy at a healthy and stable 78 percent despite capacity increase, thanks to the 6.2 percent growth in overnight visitors to 15.79 million.