The State Of Dubai Hotels Industry December 2009

Whatever the outcome of the Dubai World financial crisis

, one thing is certain. Hotels in Dubai are going to have a tough time in the months, maybe even years ahead. It doesnt take a psychic to see why. As economic activity has slowed down in the housing and financial sectors, it has also affected the other segments of the society. Many expatriates have been forced to leave following the termination of their employment contracts. Some have left behind a lot of unpaid bills, credit cards and keys in the ignition of their parked cars at the airport. Its all part of life. One may argue that with the sub-prime mortgage crisis in the USA escalating out of proportion and engulfing the financial sector as well, it was only a matter of time before its effects were felt all over the world. And Dubai was invariably affected starting in mid 2008.

Following the downturn in the housing, construction and financial sectors, allied sectors like shopping, hotel and others have definitely felt the impact. In the glory days of the recent economic boom that culminated in June 2008, hotel occupancy rates in Dubai were almost 80 percent despite the high prices quoted. As business was brisk and there was a multitude of opportunities all over the emirate, this inconvenience was just worked into the equation as a part of the cost of doing business in the Middle East.

Nowhowever, it is a distinctly different story. With the economic bubble having burst, the future suddenly does not look that rosy. Recent reports by a US based firm, Lodging Econometrics, found that the number of planned projects in the Middle East hotel industry declined by 17 percent over last year. Amazingly, this region has still not lost its appetite for taking risk, compared to a 21 percent decline seen across Europe.

But one really wonders whether the grandiose plans of the ruler and the Government of Dubai will really bear fruit and if so when. Dubai has clearly erred on the side of plenty and the excess capacity may force it to not only lower its rates but also keep them consistent and realistic for a long time to come. The present room rates at some hotels are still too high, as they are still living in a fools paradise instead of waking up to the reality of what has transpired in the last few months. Those that have indeed woken up and smelt the coffee stand to gain, and the sooner the rest of Dubai catches up, the better.

By some estimates, every Dubai hotel has lowered its room rates between 25 to 30 percent, in a bid to shore up occupancy rates. This strategy has certainly worked, as for expatriates in search of a job who are without living quarters, finding affordable hotel accommodation is the only other alternative. To compete effectively, the average Hotel in Dubai has to reduce its rates. Business is slow, so hotels in Dubai are not really filling up. One can easily see this if one compares occupancy rates at apartment hotels in Dubai or Dubai hotel bookings of last year as compared to this year. In fact reports show that Dubai hotels booking rates are in sharp decline and the industry is in a quandary as to what to do about this issue.

by: Rentals Dubai

POST COMMENT

Responsible factors for Indian Real Estate Investments Marketing Campaigns-email Marketing Management Stamford Homes In Peterborough Fl Property- Property For Sale In Florida What Is A Real Estate Broker? Real Estate Investing Guide For Beginners Right Now Is The Time To Invest In San Antonio Bank Foreclosures Online Banner Ad Rates Advertise Your Property The First-time Buyer Can Successfully Buy Foreclosed Homes For Sale Lis Pendens Can Help You Find Distressed Properties For Sale Purchase A New Home The Safe Way The List Of Things To Do After Purchasing A New Home Mortgage Relief Promises Still Causing Woes For Many Homeowners