Dubai leads region in hotel room construction

Dubai has the largest number of rooms under construction in the Middle East and Africa region, even as room rates come under pressure.

The emirate reported the largest number of rooms under construction with 14,385 rooms across 49 hotels at the end of last month, according to the consultancy STR Global. That represents 18 per cent of the total number of rooms under various stages of construction in the region.

Other active markets in the region for hotels were Doha in Qatar, and Mecca and Riyadh in Saudi Arabia.

During the first quarter, average daily rates in Dubai fell 5 per cent to US$273 in the first two months of the year, usually considered the high season. This pulled down the revenue per available room by 7 per cent over the same period, according to a JLL advisory report published on Monday.

Room rates in Dubai have to become affordable and this is a promising sign, according to Philippe Harb, the chief operating officer at One to One hotels in Abu Dhabi.

“Abu Dhabi has half the rates of Dubai and that is excellent for business, and big business group bookings are coming back,” he said.

Dubai received 11.6 million guests last year, up 6 per cent from 2013 figures, according to Dubai Corporation of Tourism & Commerce Marketing. The rate of growth cooled from the 11 per cent recorded in 2013.

The fall in the number of tourists from Russia and the euro zone contributed to the decline.

Tourist numbers from emerging markets such as South Asia, Far East Asia and Africa made up for the decline to a certain extent last year. Guests from South Asia, Far East Asia and Africa increased 14 per cent, 13 per cent and 11 per cent respectively.

“This comes on the back of rising wealth and changing consumer habits in emerging markets, in addition to increased efforts to diversify Dubai’s inbound markets,” according to the JLL report.

Over the next nine months, an additional 3,600 rooms will come on to the market, with 8,400 in line for next year. An additional 9,200 rooms are expected for 2017, according to JLL.

As of the end of first quarter, there were 64,900 hotel rooms in the Dubai market.

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