Dubai among top 10 global cities in hotel supply

Dubai / Emirates Business

With Dubai set to hit the 100,000 rooms’ milestone next month across its expanding hotel and hotel apartment inventory, the city aims to firmly position itself as a top 10 global destination in terms of available hotel supply, indicating high demand from international travellers and sustained growth in tourism volumes.
Over the next three years, Dubai’s Department of Tourism and Commerce Marketing (Dubai Tourism) expects occupied room nights in hotels and hotel apartments to reach 36.9 million, representing an 11-12% compound annual growth rate (CAGR) to 2018 end. As such, the overall room supply is expected to reflect similar growth, reaching 138,000 rooms by the end of 2018.
With demand increasing, overall projected occupancy rates until 2018 are expected to be around 77% despite growth in capacity, ensuring the emirate remains a highly competitive visitation draw. In the first quarter of 2016, Dubai’s hotels saw some of the highest global rates in occupancy, RevPar and average daily rates at 85%, AED520 ($142) and AED609 ($166) respectively.
“Structurally, healthy occupancy levels are a pre-requisite to absorb increased demand without price escalation, ensuring our destination offering remains appealing to global travellers in an intensely competitive market while retaining hotel sector performance. Our projected supply needs are based on maintaining a solid occupancy threshold despite a 40% increase in capacity which is very strong for the hospitality industry and is designed to ensure that the overall economic value for Dubai continues to be enhanced,” said His Excellency Helal Saeed Almarri, Director General, Dubai Tourism.
Aligned with its tourism strategy, Dubai’s destination proposition has been developing steadily, fuelled by investment from government, public and private sectors, in order to meet the target of attracting 20 million visitors per year by 2020. A number of major theme parks are due to open this year, along with more cultural offerings including Dubai Opera House and Dubai Historical District.
To this end, Dubai Tourism expects to expand overall Length of Stay (hotel nights) to four days by 2018, along with the volume growth in international overnight visitors – spurred by ever-increasing air connectivity and seat capacity primarily being delivered by the emirate’s two home-grown carriers, Emirates Airline and flydubai – to deliver a multiplier effect and sustain growth in demand for hotel rooms in the coming years.
Growth in hotel and hotel apartment inventory from year-end 2015 till the end of 2018 sees an expansion of properties across the classification mix, with three and four-star properties expecting 16.8% and 14.4% CAGR growth respectively, helped by Dubai Tourism-led incentives to stimulate midmarket development. For three-star properties specifically, this growth is considerably higher than the 2.9% CAGR increase for the segment witnessed from 2012-2015.
At 11.6% forecasted CAGR over the same period, the five-star segment continues to maintain a steady pace of development in line with historical trends.
“Dubai has, and will continue, to be a leading luxury destination, and we continue to invest marketing spend in bringing more tourists that are seeking the high-end experience, which had facilitated the sector to invest in adding more five-star inventory despite challenging global markets. The implementation of incentive programmes was to grow three- and four-star developments and not to stall growth of five-star properties, to ensure we maintain a healthy mix and remain appealing to segments that seek value-based offerings and will yet contribute significantly to Dubai’s GDP though in-city spending, as well as to larger groups staying for significantly longer periods,” concluded His Excellency.
A number of key top-draw attractions will open this year, helping to further propel Dubai’s international attractiveness among longer-stay visitors, with the launch of two mega theme park projects being a primary driver.
Dubai Parks & Resorts – which houses LEGOLAND Dubai, LEGOLAND Water Park, Motiongate Dubai and Bollywood Parks Dubai – is projected to attract 6.7 million visits in its first full year of operation in 2017.
Meanwhile, IMG Worlds of Adventure, opening in August of this year, has a capacity to welcome 20,000 visitors per day and is forecasted to attract 4.5 million visitors during its first full year of operations, with an equal split between residents and international visitors.
Dubai Historical District – a 1.5 sq km cultural rejuvenation project being developed to enhance Khor Dubai, as well as the other historic neighbourhoods of Bur Dubai, Al Fahidi and Deira, to showcase the emirate’s heritage, particularly in the fields of trade, handicrafts and pearl diving – is also expected to be a key visitation driver in the coming years. The project will transform the area into the leading culture and heritage centre in the region, ultimately supporting Dubai’s Tourism Vision of attracting 20 million tourists per year by 2020, by contributing 12 million visitors in its own right once the development is completed in 2019.