Dubai hotels report 85% occupancy rate

Jan 02, 09 | 1:57 am

By Nina Varghese

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."

CHALLENGES AHEAD

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.

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Source: business24-7