Hospitality sector in Dubai exceeds expectations, according to real estate report

Dubai’s hotels have exceeded performance levels over the same quarters in 2009 and 2010 and the flexibility and consistent performance in Dubai’s hospitality industry and other sectors has helped to reduce economists’ fears of a double dip recession in the United Arab Emirates.

The latest market report for Dubai’s hospitality sector covering the second quarter of 2011 from Cluttons, the real estate specialist, shows that total visitors to Dubai in 2010 were the largest to date, topping 8.3 million visitors.

It also found that overall hotel occupancy in the first quarter of 2011, the peak season for Dubai, averaged 86%, representing an increase of 4% year on year.
 
According to the report, Dubai’s hotel sector has benefited from the Emirate’s political stability within the Middle East region, with strong performance in occupancy levels and length of stay.
 
‘With a total of 8.3 million visitors in 2010, Dubai is still proving to be a popular and an attractive destination among tourists and visitors,’ it says.

‘An increase in affordability as a tourist destination has clearly helped Dubai’s comeback. Despite short to medium term recovery risks, optimistic sentiment about local market conditions continues to increase with monthly occupancy levels showing the first quarter of 2011 nearly matching the first quarter of 2008 figures which was pre-economic slowdown.

‘Occupancy rates and lengths of stay have enjoyed considerable growth. However, to what extent Dubai’s current performance is being buoyed by the recent political uncertainty in the region is not yet known and it is unclear how long this situation will continue. In the short term, Dubai seems likely to out-perform in the tourism market this year,’ said Steven Morgan, head of Cluttons UAE.

With over 52,000 hotel rooms, Dubai can confidently cater to the 8.3 million visitors that passed through in 2010, however with 10,000 rooms to be delivered in 2011, and an additional 30,000 rooms in the next three years, the major downside risk for the sector in the medium to long term still remains to be a case of oversupply, it concludes.