“Opulence is not the way forward and the future has to focus on points of difference, analysis of the market and where the gaps lie ... we have to go out and make Dubai a fully rounded destination, give visitors a resort experience rather than inflicting corporate mores on leisure travellers, and perhaps one catalyst would be to move Dubailand to The Palm Jebel Ali,” he suggests.
Ishraq’s al-Ansari goes further, calling for government legislation in order to sway the market away from marble palaces.
“The branded budget segment has risen to nearly 10% of the current room supply — from 2% only three years ago — but this is not enough.
“I believe the unabated continuing supply of high end hotels will hurt the destination overall, unless the government steps in to regulate the issuing of hotel licences, while also encouraging investment in more affordable accommodation.”
The end game
Meanwhile, Dubai itself has recaptured some of its brio with the opening of the Meydan Grandstand and Race Course at the end of March (see page 75), teleporting its usual extravaganza on to television screens worldwide during the launch Dubai World Cup event, while a ferocious winter in Europe saw leisure perk up with hotel comparison website Trivago.co.uk citing Dubai as the most requested destination for Easter bookings.
Aviation figures also underpin this optimism as traffic through the region continues to grow, with passenger numbers at Dubai International Airport up 9.2% during 2009, reaching 40.9 million, while in February 2010, traffic grew 22.6%.
But, and it’s a big but, the pace of hotel openings will to a degree impact on how the hospitality sector in Dubai can rebuild revPAR, with STR Global pipeline reports citing some 30,000 rooms in the ‘total active phase’ and 15,563 which are under construction.
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Estimates of how many will actually come to market in 2010 vary from 5000 up to 20,000 but the list of incomers (see page 72) makes ominous reading for both existing and new hoteliers, particularly with another torpid summer season on the near horizon.
With other tourist destinations equally affected by an influx of supply and lower demand, competition is another important factor as savvy travellers look for long-haul bargains and resorts in Egypt, the Indian Ocean and Asia, which will respond with deep discounts.
Already, major tour operators are calling for a change in mindset from Dubai hoteliers in order to woo premium leisure travellers, citing apparent high room rates and F&B costs as prime obstacles standing in the way of translating stopover business into longer stay holidays.
But, while some analysts predict a slow period of convalescence for Dubai hotel revenues, this very tampering down of inflationary rate rises could serve to stimulate demand to fill those new beds.
Dubai’s draws
• Strategic location and business hub
• Regional population of 1.4 billion
• Dubai is politically stable with excellent communications and services
• Expectations of 2.5 annual GDP growth during the next few years
• Rescheduling of Dubai World debt and new board expected to prioritise project development
• Developments at Dubai Marina, Business Bay, DIFC and Dubai Pearl still on track
• Airport and airline expansion continues to be robust, with second airport opening this year at Jebel Ali
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