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24 May 2024

Dubai budget hotels see up to 90% occupancy despite crisis

By Rami Eljundi

Budget hotels in the city are maintaining reasonable occupancy rates even in the middle of the economic crisis, which has made it challenging to attract visitors to Dubai, Emirates Business has learnt.

"We have had an occupancy rate of 90 per cent for the past two weeks," said Hanif Abdul Majid, general manager of one-star East Hotel. "At the same time last year, and even until a few months ago, our occupancy levels were 100 per cent."

He added, however, that given the current economic circumstances, their situation was not too bad.

"We started to feel the pressure of the crisis in November and December, when the occupancy rate hit a low of 60, but things started to rebound gradually in January, and by the end of the month the occupancy rate had climbed to 80 per cent," said Abdul Majid. He said his hotel's guests are mainly from Africa, Europe, Oman and Saudi Arabia.

"But in recent weeks we have had a decline in European visitors, although there has been a sharp hike in guests from Oman, who are coming for the Dubai Shopping Festival."

Abdul Majid said the sharp decline in occupancy in November and December was due to "shock and a time to absorb for people who were affected financially".

"Initially they just tightened spending, but gradually they started to proceed with their plans. Visitor numbers to Dubai started going up again, but these visitors were choosing low budget hotels to stay in rather than spending much more on four or five-star hotels despite the discounts offered at these places," he said.

Abdul Majid, who have been living in Dubai for 18 years, said: "Even though we have 90 per cent occupancy at the moment, DSF is still on and we are expecting a late surge of guests in the last week of this year's edition.

"It is the first time in my life that our hotel is not fully occupied during the event. However, business is good enough to cover our expenses and maintain a reasonable profit margin."

Ahmad Bappi, general manager of the two-star Ferrari Hotel, said his hotel's current occupancy rate was 75 per cent. "The slowdown started for us in December, when occupancy went down to a low of 50 per cent, which was expected. But since the first week of January occupancy rates have been rising, first to 60, then 65 per cent and finally to where it stands today."

In the same period of 2008, the hotel used to have "100 per cent occupancy daily", Bappi said.

Despite having a "fair occupancy rate of 75 per cent compared to some four or five-star hotels in Dubai", he added the decline was not only due to the economic slow down in Dubai or globally, but the recent restrictions on visit and tourist visas in terms of the length of stay and higher fees imposed on travellers by some agencies abroad.

"Regular guests have proved invaluable in keeping up a reasonably high occupancy rate in these troubled times," he said.

Sajith Kumar, on-duty general manager at Middle East hotel, agreed. "We have been welcoming our regular guests from Africa, Europe and Oman, and due to our competitive prices, they give our reference to others who plan to come to Dubai. This has succeeded in bringing us more customers and in maintaining a fairly high occupancy rate of 70 per cent at present. It is lower than the same period last year, when it was 95 per cent, but it is good under the circumstances and we will settle for it," said Kumar.