This Gulf city is leading the Middle East in hospitality
The hospitality industry in Dubai will stay ahead in the region with record developments are in the pipeline as strong rebound in tourism pushed the occupancy levels and average room rates on higher sides, according to a latest report and industry experts.
The emirate reported the largest number of rooms under construction [10,970] in Middle East and Africa while in Abu Dhabi 3,036 rooms in key developments are in the pipeline, says STR Global Construction Pipeline report for December.
In all, more than 14,000 rooms in Dubai and Abu Dhabi are in active pipeline data, which includes projects in the construction, final planning and planning stages, but does not include projects in the pre-planning stage. Only Saudi Arabia stays ahead with 15,300 rooms in the pipeline including 6,927 in Mecca, 5,804 in Riyadh and 2,569 in Jeddah.
The latest STR Global Construction Pipeline report says the Middle East and Africa hotel development pipeline comprises 498 hotels totalling 120,119 rooms. The UAE and Saudi Arabia lead the region with 29,306 rooms under construction in various projects while Doha [4,944] is the only other notable city which reported more than 2,000 rooms in the active development pipeline until December.
Speaking to Khaleej Times, senior officials in hospitality industry term the development a positive indicator for the sector. They say good times ahead for the industry and occupancy levels, profitability and average room rates have picked up momentum since tourism has staged a strong rebound in 2013.
“Year 2013 set a new record for Al Bustan Centre and Residence as we achieved year round occupancy of 85 per cent which is 12 per cent more than 2012. The demand was very high even during the low period, this healthy environment is expected to continue into 2014 for which we have already budgeted almost 30 per cent above 2013,” Moussa El Hayek, Chief Operating Officer of Al Bustan Centre & Residence, told Khaleej Times.
About new trends going forward as a result of Expo 2020 win, he said, “We started to witness a new trend as a result of the Expo 2020 long time before it was announced as the indication were in Dubai’s favour.”
“The trend is positive especially from travel trade segment. Also there is demand for corporate clients as many projects are expected to take place from now until the next six years. Our average room rate (ARR) is supposed to fluctuate from Dh700 to Dh1,000,” he said, adding that occupancy levels during December 20, 2013 to January 2, 2014 was 100 per cent and the ARR almost hit Dh850.
“We are expecting that year 2014 will perform even better than year 2013. All indications are showing that year 2014 will be another achievement for Dubai in general and Al Bustan Centre and Residence in particular. We are focusing on our feeder markets Like GCC and CIS markets and the local market as well, as these markets are the main pillars for generating revenue.”
Echoed the similar views, general manager of Ramada Downtown Samir Arora said the market is expected to be stable and optimistic, given the general mood and stronger economy.
“We would like to tap the high-end Indian and CIS markets given their potential. Etihad Airways has just added 14 new flights to India from Abu Dhabi, which only affirms their importance.”
“To-date, our hotel’s performance for year 2013 has been very good and we had a busy operation throughout the year. As compared to last year, we witnessed a fair increase in occupancy, which is currently in the upper 80 per cent on average, but rates achieved were much higher,” he added.
About the source markets, he said the guests from GCC lead by Saudi Arabia, Kuwait and Oman traditionally hold the key for the hotel. “We also have European markets who patronize our hotel due to its key location. We have also added North America, some countries from Africa last year,” he said.
To a question about Expo 2020 win and its impact on ARR, he said activity related to Expo 2020 will only initiate in the next couple of years and won’t see an immediate effect in 2014.
“Dubai as a destination will continue to evolve due to Emirates airlines which continues to add new aircrafts to their fleet every month and fly to newer destinations. Given our hotel’s location, we are able to achieve a premium of 20 to 30 per cent extra on our rates compared to other locations within Dubai,” Arora concluded.
By Muzaffar Rizvi