Dubai hotels report 85% occupancy rate

The year 2008 was a good one for the hospitality sector in the Middle East, which remained, if not completely insulated from the global meltdown, on a firm footing.

The Middle East hospitality sector, which has been witnessing high occupancies, continued to do well in 2008 with more hotels opening, ongoing projects on schedule and growing revenue, according to top hospitality industry sources.

Dubai has been witnessing high occupancy rates, said to be the world's highest at 85 per cent. The figures from the Department of Tourism and Commerce Marketing (DTCM) indicate that hotels in Dubai registered average occupancy levels of 83.2 per cent. The number of new hotels and hotel apartments also went up to 482 compared to 439 in 2007. This lead to an increase in hotel rooms from 26,771 in 2007 to 30,306 hotel rooms in 2008, according to DTCM.

Reports quoting the consultancy firm Deloitte said hospitality revenue in the Gulf increased over the first nine months of 2008, but a decline is likely in the fourth quarter.

The Deloitte report said: "Abu Dhabi reported a 39.9 per cent change in revenue per room in the first nine months of the year, followed by Oman with 32.9 per cent and Saudi Arabia with 23.1 per cent, while Dubai grew 4.7 per cent.

Rob O'Hanlon, Tourism, Hotel and Leisure partner at Deloitte Middle East, quoting STR Global, said: "Hotel performance remains very strong in Abu Dhabi with revenue per available room (revPAR) up 45 per cent, while Dubai revPAR grew 6.7 per cent year-to-October 2008.

"To ensure that hotels performance remains solid, an increased marketing effort for the UAE as a whole is important. The other part of the equation is to align this strategy with the route expansion plans of airlines like Emirates and Etihad Airways, which are key drivers of the UAE tourism traffic."


At the same time, the hospitality industry in the region is gearing itself to face the challenges that 2009 will bring and have chalked out strategies to cope with a likely downturn, according to industry sources.

Samir Daqqaq, Global Sales Head, Marriott, said: "Everybody is facing it [the downturn]. Marriott has been through it a few times. It is more severe this time – more of a global syndrome. We have not seen very severe drops [in sales and occupancies] internationally. We are mobilising our forces and we are strengthening our marketing to make sure we withstand the downturn to minimise the drop in occupancies." He added: "We have a strong engine of sales and distribution. We have invested a lot in this engine. We have trained our people well. They are talented and have come up with some very good aggressive strategies."

Marriott is offering some special value added incentives to book with them, he said.

Some other international brands like Hyatt are taking the long-term view and hope to ride out the crisis. Harmit Singh, Chief Financial Officer, Hyatt, said: " This crisis would be a short-term problem, maybe [it would last] a couple of years, and Hyatt would come out of it stronger. There is nothing that worries us in the short term."

Omer Khaddouri, Rotana's Vice-President, Operations, said: "The uncertainties surrounding the global economy make it difficult to predict the outlook. To mitigate the effects of the slowdown, a cost savings plan comprising mainly a reduction in fixed costs and improved purchasing agreements is being implemented."

A feather in the industry's cap was when FutureBrand's Country Brand Index (CBI) ranked the UAE as one of the "rising stars" among the world's top tourist destinations, while putting the country once again on top in the 'Resort and Lodging Options'. The UAE was placed well ahead of countries such as the United States, Maldives and Australia.

Daqqaq said: "In addition to the existing demand-supply gap [with the demand higher], UAE's effort to promote and position the country as a year-round destination for leisure and business has been in good stead.

"With its vision and foresight, the leadership took what many would have dismissed as a costly gamble. The UAE, in particular, and the region, in general, has been an important market for us."

He added that the UAE has remained one of the most popular tourist destinations in the world according to an independent global study, gaining solid ground on the strength of its variety of accommodation options.

Mario Natarelli, Co-Chief Executive of FutureBrand, said: "To maintain a strong country brand, there is a need to sustain the momentum through initiatives that deliver the brand's core essence. In the case of the UAE, the country has remained a class of its own in delivering world-class hospitality options that have truly redefined the industry.

"The UAE's brand initiatives are clearly aimed at reaching higher levels of excellence in terms of service quality, innovation and meeting high expectations of the hospitality market." FutureBrand's CBI 2008 cited the UAE's continued efforts to establish itself as a strong brand for hospitality, promoting resorts for their unique architecture, premier service and ultimate luxury. The UAE's consistency has helped the country maintain its stronghold in CBI's Resort and Lodging Options category, which saw a major shake up in the rest of the standings with the United States leapfrogging from sixth last year to the second spot this year, replacing second-placed Maldives.


The global credit crunch and the financial downturn has caused delays in many real estate projects. However, hospitality industry sources said that hotel projects in the Middle East, which are to open in 2009 and 2010, are on schedule.

According to the Construction Pipeline Report for the Middle East, Lodging Econometrics (LE), the Global Authority for Hotel Real Estate: "Fifty-four hotels, which is about 15,360 rooms, are forecast to come online in 2009." The report said: "Dubai contains 31 per cent of all projects and 39 per cent of all rooms in the total Middle East pipeline. If viewed as a 'city state', Dubai would have the largest construction pipeline of any metropolitan area in the world, even larger than Las Vegas, New York, Washington, London, Shanghai, or Beijing."


According to the Construction Pipeline report, the Middle East has been viewed as an "extraordinary opportunity" for global hospitality brands. Of the 527 projects in the pipeline, 341, or 65 per cent, have already made a branding decision, while 155 projects have yet to decide, the report said. The report anticipates that 75 per cent of those will make a branding decision prior to opening.

Such an explosive growth makes the Middle East one of the most important areas for global hotel brands. "With 77 per cent of total development in the upscale segments, it serves as an important showcase area for companies to establish and advance their brands through large, iconic, luxurious hotels," according to the report. The Middle East-based Rotana Hotels, Inns and Suites has 33 projects, or 10,256 rooms, which is the largest guest room count, in the pipeline. Of these, 17 are under construction.

The company has an aggressive strategic plan, with a stated goal of having 65 hotels open by 2012.

The globally renowned Jumeirah International has 10 ultra-luxury properties in the works. The Jumeirah Group has overseas expansion plans in place with hotels opening in China and Macao. Fairmont Hotel and Resorts, which is majority owned by Saudi Arabia's Kingdom Hotel Investments, also has 10 luxury properties in the pipeline, including one on Palm Jumeriah, and the 1,005 room Fairmont overlooking the Holy Mosque in Makkah.

France's Accor has the largest pipeline project count in the Middle East with 34 hotels.

There are eight Sofitels and 11 Novotels.

Accor is also one of the pioneer mid-market developers in the region.

The InterContinental Hotel Group has plans to increase its footprint with both the InterContinental and Crowne Plaza brands.

InterContinental is also accelerating a mid-market programme in the region with the newly designed prototypical Holiday Inns and three Holiday Inn Express properties.

Europe's Rezidor Hotel Group has about nine Radisson SAS properties under development, and also its mid-market brand, Park Inn. Switzerland's Mövenpick also has an impressive pipeline of 24 projects, 10 of which are located in Dubai.

Germany's Kempinski Hotels and Resorts, which operates Emirates Palace in Abu Dhabi and the Kempinski Hotel at the Mall of the Emirates in Dubai, has another 10 under development, including projects in Syria, Bahrain, Lebanon, and Jordan.

North America-based companies see the Middle East as an important target for their brands. Marriott has 23 projects in the pipeline, which includes The Ritz Carlton, JW Marriott, Renaissance and Courtyard properties. Starwood is focused on its high-end offerings, having a total of 21 pipeline projects from its luxury collection, St Regis, W, Le Meridien, Westin and Sheraton Brands. Hilton has a total of 11 projects under development between its Conrad and Hilton labels. The Singapore based Banyan Tree Hotels and Resorts, meanwhile, has six each of its Banyan Tree and Angsana Resorts and Spas in the pipeline. These are smaller, luxurious, one-of-a-kind, boutique designs where the resort and spa are the destination itself.

The Indian hotel company Bharat Hotels has also announced its intention of setting up a 293-room five-star hotel in a joint venture with Nakheel.


According to Raj Bhatt, Director,, a hospitality recruitment portal, even in the current slowdown, hotel projects are being announced. "There might be a delay in the projects but they will definitely be completed. In the GCC alone, the growth rate of job opportunities would be 20 per cent," he said.

He added that it was estimated that once the new projects open for business there would be a requirement of 111,650 trained hospitality staff.

The GCC has the largest share in hotel development with approximately 240 projects to become operational between 2008-2011.

"The estimate is that the Gulf countries alone would need additional manpower resources of approximately 90,000 to cater to some 69,200 rooms," Bhatt said.

Bhatt added that if the jobs in the related sectors like restaurants, facility managements were to be included; the requirement for manpower would be much more. The present estimates related only to jobs in the hotels sector.

The remuneration of hotel staff in Dubai, according to Bhatt, will have to go up to match salary levels in former source markets like India and Philippines.

"I am expecting some correction on the remuneration front to take place in this region, the salaries have to be competitive with other markets to attract talent and retain them," Bhatt said.


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