Dubai will need to attract an additional 2.5 million tourists annually to absorb an estimated 60 percent increase in hotel rooms over the next five years, Deloitte LLP said.
Dubai, which has around 50,000 rooms, may struggle to maintain occupancy and rates as a further 30,000 rooms are likely to be added, said Alex Kyriakidis, the New York-based consulting company’s global managing director of Tourism, Hospitality & Leisure.
The sheikhdom has spent billions of dollars to transform itself into an international tourist destination. It built the sail-shaped Burj Al Arab hotel and opened a 160-room hotel designed by Giorgio Armani in the Burj Khalifa, the world’s tallest tower. Horserace complex Meydan and Dubai Mall are also among the attractions that have been built.
Even if half of the expected construction is canceled, “15,000 rooms would be a fairly big increase for Dubai to absorb,” Kyriakidis said in an interview yesterday. The number of visitors will need to go up to about 12 million from 9.5 million now, he said.
Average hotel occupancy has fallen to 70 percent from 80 percent in 2007, while the revenue per available room is estimated at $240, down from $300 in 2007, according to Dubai-based Kyriakidis.
InterContinental Hotels Group PLC, owner of the Crowne Plaza and Holiday Inn brands, has several properties in Dubai. Kerzner International Ltd. opened the Atlantis resort in November 2008, adding 1,500 hotel rooms at the foot of one of Dubai’s palm-shaped islands. Jumeirah Group, the hotel management company owned by Dubai’s government, manages eight properties across the sheikhdom.
Hotels must work with airlines such as Emirates and Etihad Airways to develop packages that deliver lower prices for tourists from emerging markets such as China and India, he said. They should also try to attract some of the travelers who go through Dubai’s airport to other destinations. Traffic at Dubai International increased 15 percent to 4.01 million passengers in October, the airport operator said on Nov. 24.
“Dubai airport numbers are increasing at an exceptional rate, however one of every five people who land in Dubai comes into Dubai,” he said. If only a small percentage of the transit passengers stayed in Dubai, hotels would continue to have “very healthy” occupancy.