First with Financial Comment from Arabia

World’s tallest hotel in Dubai 75% empty

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The world’s tallest hotel was inaugurated in Dubai yesterday. But since its soft launch two weeks ago occupancy has been just 25 per cent. Clearly the Rose Rayhaan will be hoping for a boost in room sales from its official debut.

Guests can stay in rooms upto the 65th floor of this 333-metre high tower, just five metres higher than its rival in Bangkok. It cost $180 million to build and is right opposite the Dubai International Financial Centre in the midst of the downtown.

Loads of rooms

The hotel should therefore be a synch to fill. But over 72 floors there are 482 rooms, including suites and penthouses. That is a great deal of space to fill in a city dogged by a deep recession after a property crash.

The response is deep discounting. You can currently stay in the world’s tallest hotel for just $109 per night, not bad for a brand new room with a view.

But don’t expect to order an alcoholic drink. The hotel is going for the niche global non-alcoholic market attracting clients from the GCC, China and Iran, many of whom chose not to drink on their holidays or business trips.

Whether restricting market appeal in this way is a good marketing strategy is an interesting experiment in Dubai which stands as a liberal oasis in a largely dry region. Certainly competing hotels were glad to hear this decision.

Falling revenues

For the Dubai hospitality sector revenue per available room was down 19 per cent to $241 year-on-year in November. Occupancy rates of 82 per cent were static. By global standards these are hardly bad figures and it is to the advantage of Dubai that it starts from such a high level, if these figures are to be believed.

Yet as the inventory of rooms grows in the city the market is surely likely to deteriorate further for the sector with more and more special offers like the $109 room in the world’s tallest and newest hotel right next to the main exhibition facilities and the DIFC.

But what is bad news for the hotels is clearly great news for visitors and business travelers. Dubai, once so expensive and flashy is now a much cheaper destination.


Written by Peter Cooper

January 7, 2010 at 9:07 am

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