Destinations

Hotel Room Boom Leads to Dubai’s Weakest Occupancy Month in 18 Years

Aug 13, 2014 10:00 am

Skift Take

The story isn’t as bad as the headline, especially since the boom is related to a build out of needed budget rooms.

— Jason Clampet

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Ahmed Jadallah  / Reuters

A general view of Burj Khalifa (C), the world's tallest tower, and home to the Armani Hotel. Ahmed Jadallah / Reuters


Dubai’s hotels had their lowest occupancy in at least 18 years in July, standing more than half empty room supply increased while demand fell, according to industry researcher STR Global.

Occupancy stood at 45.4 percent in July, STR Global said in a report dated Aug. 11. That the lowest since the company began tracking the Dubai hospitality market.

Dubai, which built some of the world’s most iconic hotels such as the sail-shaped Burj al Arab, plans to almost double the number of hotel rooms by 2020 as it expects a surge of visitors ahead of the World Expo that year. The emirate is targeting about 160,000 rooms, many of them in the three- and four-star category rather than the luxury segment, Helal Saeed Almarri, director general of the Dubai Tourism and Commerce Marketing, said in March.

“As July is one of the hottest months within the region and coincides with the fasting month of Ramadan, the city had an overall negative trend, on top of growing supply,” Elizabeth Winkle, managing director of STR Global, said in the report.

Revenue per available room, an industry measure of occupancy and rates, was 290.23 dirhams ($79) according to STR Global, which advises hotel operators, developers and banks on the hospitality industry.

Dubai, one of seven sheikhdoms that make up the United Arab Emirates, lured 11 million tourists last year, up 11 percent from 2012, helping the economy expand at the fastest pace in six years. The hospitality industry benefited in the aftermath of the Arab Spring, attracting tourists who were avoiding political turmoil in destinations such as Egypt and Syria.

To contact the reporter on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net. To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net. 

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