March 18 (Bloomberg) -- Dubai plans to almost double the number of hotel rooms by 2020 as it expects a surge of visitors to the desert sheikhdom ahead of that year’s World Expo.
The emirate that spent more than $110 billion to transform itself into the Middle East’s commercial and entertainment hub is seeking to attract 20 million tourists annually by the end of the decade, Helal Saeed Almarri, director general of the Dubai Tourism and Commerce Marketing, said in an interview yesterday. To do that, it needs to raise the number of hotel rooms to as many as 160,000, many of them not in the luxury category Dubai is known for, he said.
“None of these rooms are being built specifically for the Expo or any one event,” Almarri said. “They’re being built purely because of the core tourism numbers. Dubai won’t turn into a ghost town after the Expo.”
Dubai, part of the seven-member United Arab Emirates, lured 11 million tourists last year, up 11 percent from 2012, contributing to economic expansion of 4.9 percent, the fastest pace in six years. Tourism accounted for about 20 percent of gross domestic product in 2013, and is forecast to increase between 7 percent and 9 percent through 2020, Almarri said.
East and West
While Saudi Arabia and India represented two of the biggest markets for Dubai in 2013, according to DTCM data, the emirate draws tourists from both East and West. Dubai airport passenger traffic grew 14 percent in 2013 after expanding 13 percent a year earlier. It hit a record 6.4 million in January.
“We have a very fragmented source markets, no single market exceeds 10 percent of tourists,” Almarri said, “That is obviously very positive for us, because it allows us to circumvent any anomalies in terms of economies or currencies.”
The emirate’s expanding hospitality industry helped boost mall and retail revenue for Emaar Properties PJSC. The developer of the Middle East’s biggest shopping center, Dubai Mall, plans to raise as much as $2.45 billion from selling 25 percent of Emaar Malls Group, the company said March 15. It’s seeking to list shares on Nasdaq Dubai and in London before mid-June, Chairman Mohamed Alabbar said in an interview today.
Dubai, whose economy shrank 2.4 percent and was near default in 2009, plans to spend about $8 billion ahead of the Expo. To help fund the promotion of Dubai’s tourism and trade industries, it will impose a tax as high as 20 dirhams ($5.45) per room for each night, depending on the hotel category, starting March 31.
Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum moved in January to speed up hotel projects. The period required for preliminary consent was cut to two months from as many as six, and a one-stop approval center was established. Government land for developers of three- and four-star hotels will be granted on “favorable” terms, the DTCM said in January.
Officials want to boost the supply of more affordable hotels to cater to business travelers and holidaying families. About a third of Dubai’s 85,000 rooms are in luxury hotels. It’s offering to waive fees if landowners change development plans to build cheaper accommodation, and as much as a five-year exemption from a 10 percent fee on revenue.
“In 2020, five-star hotels rooms will still be the majority, but we’d need the three and four-star category” to build a more balanced market, Almarri said.
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