InCity Hotels

Though nobody dares deviate from the official “all is well” line, Dubai hotel occupancy is at record lows. Has the Dubai city been rumbled?

There’s a quiet desperation in Dubai hotels, which have seen occupancies plummet this summer. Reliable sources told Kipp Report that average occupancy in city hotels at the end of June was 56%; the swanky new Raffles was struggling thanks to a high-rate, no-beach double whammy at 19%, while the Grand Hyatt was at 40%. The latter denies this figure. It does admit occupancy is a little lower so far this summer, but says the current rate is around 70%. Raffles also denies 19% - it says June closed with 30% occupancy.

Even so, compared to last year, when DTCM (Dubai Department of Tourism and Commerce Marketing) claimed record occupancies of 85%, ahead of Hong Kong, Sydney, Tokyo and London and nobody was discounting hotel rooms in Dubai, this year one can walk into most hotels at half price. Each is coping with whatever strategy best suits its market positioning, but nobody dare admit officially that there is a problem.

General opinion suggests the situation could be a combination of factors, some external - like the globally depressed economic scenario and higher cost of flights thanks to spiralling oil prices - but there is a nagging suspicion the city has been rumbled: strained infrastructure, choked roads, few transport options, ugly cranes and little to do beyond malls.

Travel agents would add greedy hotels to the litany: when the sun shone brightly on Dubai three, even two years ago, most hotels happily raked in as much as they could with four-star properties increasing rates to an extortionate Dh800-1,200.

This year, the city finds itself excluded from brochures of leading European travel agents, who would rather sell holidays to Sri Lanka, Thailand or other exotic destination that, one assumes, offer more by way of enriching experiences at lower prices. Ironically, Thomson Holidays, Europe’s leading travel agency now recommends Israel as the only destination worth visiting under “Middle East”

Source - Kipp Report