Why Dubai is NOT building more hotels for World Expo
Dubai is not building any hotels specifically for Expo 2020 and will look at ensuring healthy room supply in line with its Tourism Vision 2020, the head of Dubai’s tourism body has said.
Speaking exclusively to Gulf Business, Helal Saeed Al Marri, director general of the Department of Tourism and Commerce Marketing (DTCM) denied rumours that 100 hotels are being built for the six-month long event.
“With regards to the Expo, we will not be building hotels specifically for the event, because that’s not the strategy for Dubai’s tourism,” he said.
“All the hotels are being built for our 2020 strategy – the Expo is a six month event during which hotels across the UAE will benefit greatly. But we are not building anything specifically for Expo,” he asserted.
Dubai hopes to attract 20 million visitors per year by 2020, as part of its tourism strategy, and experts estimate that the Expo will draw an additional five million visitors.
Over 11 million guests stayed at Dubai’s hotels last year, up 10.6 per cent compared to 9.9 million in 2012, according to the latest figures from DTCM. Total guest nights last year rose 11 per cent to 41.57 million, while occupancy rates for hotel rooms and hotel apartments increased to 80 per cent.
On the supply side, the number of hotel rooms and apartments at the end of 2013 amounted to 84,534 (611 establishments) compared to 80,414 (599 establishments) in 2012, an increase of over five per cent.
In the current development pipeline for 2014-2016, an additional 141 hotel establishments including 99 hotels are expected to be added to the market, bringing the total to 751 hotel establishments and just under 114,000 rooms.
To accommodate its targeted visitor numbers for 2020, DTCM estimates a total requirement of between 140,000 to 160,000 rooms. Hence fears of oversupply in the market are unwarranted, said Al Marri.
“Our challenge is to ensure that we can build the number of hotel rooms and holiday homes needed, since we are putting new regulations in place for holiday homes and serviced apartments,” he said.
“We are encouraging very healthy growth levels. If you take a simple statistic – tourist numbers are growing at 10 per cent per year and even if you halve that number, you still need the number of rooms to catch up.
“We are at very high occupancy today so if you have to continue with that, growth has to happen,” he added.
The focus is presently on developing affordable hotels within the emirate, to cater to a wider range of tourists. In September last year, the Dubai government announced an initiative to incentivise hotel owners to bring forward construction timelines of three and four star hotels. It stated that eligible developments will be granted a concession on the standard 10 per cent municipality fee, which is levied on the room rate for each night of occupancy.
“We are encouraging a lot more three and four star hotels and we have put big incentives in place for them and we really feel that as those come online, the market will balance a lot more,” stated Al Marri.
In line with that, Dubai developer Nakheel, which recently launched for sale 94 hotel plots for sale on its new Deira Islands project, said that it aims to primarily develop three and four star properties.
“Currently, there are no beachfront hotels in that segment in Dubai, and hence we saw an opportunity to deal with that shortage,” said Nakheel chairman Ali Rashid Lootah.
By Aarti Nagraj