First with Financial Comment from Arabia

Dubai heading for hotel overcapacity in 2010

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paris-hilton-poses-in-bikinAll those luxury hotels started during the Dubai building boom are now coming up for completion and are about to add thousands of rooms to a market just starting to shrug off the impact of the global financial crisis on local tourism.

Next month the world’s tallest hotel will open, the Rose Rayhaan, topping the Burj Al Arab at 333 metres tall; and the fully refurbished Jebel Ali Hotel will be back open for business. Then there is a 550-room Conrad Hotel on the Sheikh Zayed Road coming up for 2010 and the second Ritz-Carlton at the Dubai International Financial Centre.

On the crescent of The Palm Jumeirah the 410-room Ottoman Place and the Royal Amwaj are also due to open in 2010, while the Palazzo Versace is scheduled to open on the Dubai Creek.

Crisis over

This will be a bumper period for new luxury hotel launches in Dubai. Earlier this year the global financial crisis had left some hotels with very low occupancy. But this autumn business has returned for the beachfront properties, and rates and occupancy are again running high.

Downtown hotels have been hit by the lower attendance levels at exhibitions and conferences this season as well as the general slowdown in business activity and the real estate crash. New launches like The Address Dubai Mall have been well received but are stealing business from the older properties.

The first year of the new decade should therefore be a very good time for tourists and business persons to visit Dubai. There is an unprecedented choice of excellent hotels available, and the competition will keep prices down and service quality up.

One early sign of market forces are the deals now available in restaurants for meals and beverages. For example, The Jumeirah Emirates Towers has a four-course business lunch for AED100 and palatable wine from AED32 a glass; such prices were unimaginable even a few months ago.

Market forces

But hoteliers have been pleasantly surprised by the bounce back in business along the beachfront this autumn. Certainly the completion of infrastructure like The Walk promenade adjacent to the Jumeirah Beach Residences has added to the appeal of this area, while sea, sand and sunshine come free of charge.

It is not all good news for hoteliers, of course. The competitive meal pricing at restaurants on The Walk has put some pressure on hotel restaurant and bar prices. But there has probably never been a better time to plan a trip to Dubai.


Written by Peter Cooper

November 10, 2009 at 9:51 am

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