Tourist numbers up, spend up… profits down

Tourist numbers up, spend up… profits down

Good and bad news for the UAE’s hotels, as more tourists are here and tourism income is up. So why are they making less cash?

September 15, 2010 3:25 by Sam Potter

The sharp drop in international business travel is thought to be a key influence in the near halving of hotel rates for US travelers in Abu Dhabi. That, alongside the general economic situation and new supply coming on stream, meant the emirate suffered the biggest drop in hotel rates worldwide for US customers: the second quarter showed a 46 percent plunge in year on year prices. UK travelers also benefitted – rates for them fell 35 percent compared to the same period last year.

Dubai suffered a more modest 10 percent year on year drop for US travelers. And for UK travelers, rates even managed to climb a tiny 3 percent. This didn’t seem to discourage them, however; the majority of Dubai’s tourists in the first half of the year — 382,356 visitors — came from the UK.

“Because there have been a lot of hotel rooms added to the inventory, prices are becoming more attractive, which in turn attracts a lot more people to Dubai. Many people view the city as an affordable luxury destination,” explains Gassan Aridi, CEO of Alpha Tours.

But Bin Mahmoud Chiheb, senior vice-president at Jones Lang Lasalle Hotels, recommended caution. He told Gulf News: “Hotels in Dubai are still [expensive] by international standards. The correction happened and the ‘abnormal returns’ are over. Competitiveness and efficiency are now the name of the game. Some of the satellite destinations that used to be marketed as ‘Dubai’ will have to adjust their offering.”

The upshot is that tourists are returning, but not in large enough numbers to allow the hotels to name their price – at least, not with so much fresh capacity coming online.

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