A discounted room with a view

A discounted room with a view

Hotel room rates across Dubai are likely to drop a further 35 percent in 2009, and the market is unlikely to recover until 2011.

May 4, 2009 12:23 by Dana El Baltaji

Room rates in Dubai are expected to fall 35 percent this year, say executives at Jones Lang LaSalle Hotels; rates have already posted a 30 percent drop in RevPar (revenue per available room) in the first quarter of 2009.

“This is going to be a challenging year for Dubai hotels and this summer is going to be quite hard as feeder markets like Europe suffer,” Arthur de Haast, global CEO of Jones Lang LaSalle, told a Dubai-based business daily.

Other Middle Eastern cities, however, are showing signs of strength: “Abu Dhabi is still going to show some growth this year, as will Qatar. We are also going to see some pretty good growth in Saudi as religious tourism is less impacted by the economic crisis,” de Haast said.

In spite of the global economic downturn, de Haast warns hotels that lowering room rates significantly is unsustainable, and will cause complications once the market recovers. If rates are lowered to $300 per night, he explained, customers will be unwilling to pay $600 once the market picks up.

Furthermore, de Haast does not see a recovery in Dubai’s hotel industry until 2011 due to the number of hotels scheduled for completion in 2009 and 2010.

Last March, TRI Hospitality Consulting revealed that 33 percent of hotel projects in the region are on hold for over six months, and 39 percent will be completed on schedule. Earlier that month, Maggie Moore, director of The Hotel Show in Dubai, announced that a total of 61 hotel developments worth $8.8 billion (AED32.3 billion) are due for completion before the end of 2010; 35 hotels will be built in the UAE.