Who is to blame for the hotel occupancy slump this summer?

While Dubai hotels have been far from empty this summer, word on the hot and steamy streets is that occupancies plummeted to depths below average in June to July, although few hoteliers are willing to concede this fact to ATN on the record.

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By  Gemma Hornett Published  September 1, 2006

Editor, gemma hornett:|~|The-Ritz-Carlton,-Dubai-l.gif|~|Picture courtesey of The Ritz-Carlton, Dubai|~|While Dubai hotels have been far from empty this summer, word on the hot and steamy streets is that occupancies plummeted to depths below average in June to July, although few hoteliers are willing to concede this fact to ATN on the record. It is, of course, normal for occupancies to dip in the summer, as cooler climes in Europe, Asia or the US beckon, but this year some hotels, even beach properties on the Jumeirah strip, have reported the lowest June, July and August rates they have witnessed in years. In 2004 and 2005, summer occupancy levels were often as high as 90%-plus, particularly at beach hotels, but this year the averages have decreased somewhat to around the 70 or 80 mark, and one hotel has reported a disappointing 60% average. So who or what is to blame for the 2006 summer slump? Dubai-based Destination Management Companies (DMCs) have pointed the finger at the hoteliers, scolding them for being greedy and keeping their room rates too high. They claim the special deals and promotions dumped into the market in July were a year too late and that potential inbound leisure guests had already selected alternative destinations that proved better-value-for-money. It is true that Dubai is now deemed one of the most expensive cities in the world in terms of room rates, which are on par with London, Paris, Tokyo and New York. The emirate is number two on the list of highest RevPar globally and this is not only impacting leisure tourism, but limiting the number of MICE groups willing to outlay thousands, if not millions, of dollars, when destinations in Asia, for example, offer them more bang for their buck.||**|||~||~||~|The DMCs are concerned that if prices are sustained at this level, Dubai will gain a bad reputation worldwide for being ‘too pricey’, a stigma it can ill afford and one that could potentially undo all the good work undertaken by the DTCM to promote Dubai. But high room rates are not solely to blame for low occupancy rates this summer; there are many more local, regional and global factors to consider. Hotel industry consultant, Guy Wilkinson, points out that extensive building work, particularly in Jumeirah, coupled with and Dubai’s heavy traffic, are unappealing to visitors who may wait until construction has died down to venture back to Dubai. Other destinations in the UAE and the Gulf, such as Ras Al Khaimah and Muscat, have benefited from Dubai’s “poor infrastructure” and “expensive rates”, in that both have attracted an increase in visitor numbers during this season, he claims. Anees Awwad, regional director of sales, The Ritz-Carlton Hotel Company, also notes that fluctuations in booking trends have impacted occupancies. Last year, many GCC nationals visited Dubai, but this year both Europe and Asia have witnessed a resurgence in bookings from this region, he says. He concedes that while occupancies at The Ritz-Carlton, Dubai, where he is based, have been lower during the week, the hotel has been almost 100% full most weekends, from Wednesday to Saturday. High room rates are acceptable, he says, because Dubai is positioning itself as a “worldwide metropolitan resort and city” that is “raising the standards in the Middle East”. But world-class standards will have little clout if forces more powerful deter tourists from venturing to the Middle East. One cannot ignore the impact of ongoing Middle East conflicts; in Lebanon, the Gaza Strip Iraq and Afghanistan. It would only take more of the region’s countries to get involved in hostilities, which would render the Middle East off limits to tourists, to wipe Dubai off the must-see list. ATN wants to hear your news and views burning industry topics. E-mail your comments and suggestions to gemma.hornett@itp.com or call +971 4210 8608.||**||

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