Dubai hotel rates could face further pressure as one of the world’s biggest room booking sites adds apartments and villas to its listings.
Nasdaq-listed Priceline Group, which owns the booking.com website, is boosting private accommodation listings as tourism arrivals surge in the city. Priceline has 747 properties listed on Booking.com in Dubai, of which about 400 are individual apartments.
The further expansion into villas, chalets and individual apartments segment comes at a time when hotel room rates in Dubai are coming under pressure because of the strong US dollar and the addition of thousands of new rooms to the market.
Average daily room rates at four and five-star properties fell 12.8 per cent in April to US$373.78 from the same period last year, according to Hotstats data. That was the biggest rate of decline in four years.
Dubai added 7,799 rooms during the past year to reach 92,333 rooms at the end of December, up 9.2 per cent from 2013, according to the Department of Tourism and Commerce Marketing (DTCM).
“We are doing a lot of expansion into the long tail accommodation, [such as] self-catered products, apartments and single homes,” said Darren Huston, Priceline’s chief executive, in Dubai yesterday.
Dubai ranks sixth in terms of inbound travel bookings globally after New York, London, Paris, Barcelona and Rome according to Booking.com. Dubai had 657 hotels and hotel apartments at the end of last year.
Booking.com expanded its listings by about 25 per cent over the past year, comprising of 200 new properties – most of them apartments and guesthouses.
“That’s where the growth is coming from,” said Mr Huston, who expects to maintain the growth rate this year.
The website takes a commission of 15 per cent on average for each transaction.
It will also bring the website into closer competition with rivals such as Airbnb that list long-stay properties at popular but pricey destinations such as Palm Jumeirah and Jumeirah Beach Residence. a
“Competition is healthy but one needs to look at the legal aspects of whether these [individual homes] are handled by licensed agencies,” said John Podaras, a partner at Hotel Development Resources, a consultancy in Dubai. “Also … this would take on hotel apartments head-on.”
In June last year, DTCM said it required hospitality operators with 20 or more residential properties in their portfolio for use as holiday homes to apply for a business licence.
Homeowners with 20 or more units can also apply to become licensed operators.
Booking.com also planned to grow its listings elsewhere in the UAE, said Mr Huston.
As for Priceline, it plans to expand the services of OpenTable, its online dining reservation service, to Dubai over the next 12 months.
“Dubai is a major restaurant capital,” said Mr Huston. “We have the deepest penetration of OpenTable in London and the United States, and we would like to have a similar penetration in Dubai.”
Priceline, which employs 28 people in the emirate, bought OpenTable for US$2.6 billion in June last year.
OpenTable, which currently lists 36 restaurants in Dubai and one in Abu Dhabi, will compete with rivals such as Roundmenu.com and ReserveOut.com.
Roundmenu, which started in Dubai in 2012, lists about 1,250 restaurants and fast-food outlets in the emirate.
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