Business | Tourism

Dubai leads list of global hotel projects under construction

UAE tops list of 11 global markets with the most hospitality developments

  • By Shweta Jain, Senior Reporter
  • Published: 00:00 July 6, 2011
  • Gulf News

  • Image Credit: Megan Hirons Mahon/Gulf News

Dubai: Dubai powered the UAE to the top of a list ranking the 11 global markets with the largest number of hotel projects in the latest report released by Tophotelprojects.com, a database for hotel projects.

With a massive 97 upscale hotel projects under way, the study — which analysed facts and data of over 4,300 projects worldwide — reveals that Dubai is taking the lead in the construction of hotel projects in the UAE.

The emirate is closely followed by Abu Dhabi with 66 projects and Ras Al Khaimah with 14, bringing the total to 177 under construction in the UAE.

Other global markets with a high number of hotel projects under way include Berlin with 49, New York City with 43, Moscow with 32 and Marrakesh with 24.

The numbers fuel fears recently voiced by some industry experts about an oversupply (of rooms) in the UAE hotel market. Global consultancy CBRE recently pointed out that Dubai hotels' exposure to the tourism sector and an oversupply of luxury accommodation will "likely delay a recovery in room rates".

Supply of rooms

The latest numbers by Tophotelprojects.com, show 61,333 hotel rooms still due to become available in the UAE's upscale hotels segment, of which Dubai alone has 35,154 rooms, followed by 21,572 anticipated in Abu Dhabi and 4,607 in Ras Al Khaimah.

Commenting on Dubai's sustained performance, Alex Kyriakidis, Global Managing Director for Tourism, Hospitality and Leisure at Deloitte, told Gulf News: "Dubai's hospitality sector continues to deliver good results in 2011. For the year to May 2011, STR Global reports Dubai occupancy at 79 per cent, ADR (average daily rate) at $239 (Dh877) and RevPar (revenue per available room) of $189, which is second only to Riyadh in the Middle East." He added that this is being achieved despite the total number of operational rooms "increasing from 30,000 to 50,000" over the past five years.

Global real estate investment and advisory firm Jones Lang LaSalle (JLL) said in its recent second quarter 2011 report that project delays and cancellations will "contribute to smoother absorption of new supply". According to JLL estimates, at the end of the second quarter, the total hotel supply in Dubai stands at "approximately 52,300 rooms".

Dubai's hotel rooms are also much more diversified today, said Kyriakidis. "Five years ago, over 80 per cent of Dubai's hotel rooms were in the upscale to luxury segments. Today, this is down to 60 per cent, which means that more rooms have come on stream in the midscale to limited service segments, thus providing an offer to tourists at all ends of the spectrum, from luxury to limited service," Kyriakidis said, adding that Dubai was the "most diversified" market in the GCC.

According to the JLL study, the first half of 2011 saw the addition of "1,200 branded hotel rooms" in Dubai, with some 2,500 rooms expected to enter the market in the second half of the year. And approximately "12,500 additional guest rooms" are expected to be completed by 2013, JLL estimates.

Despite the credit crunch the hotel development business continues to do well, says the Tophotelprojects.com report.

Citing the Dubailand project being developed by Tatweer, the report stated the project would be realised with several large theme- and event-oriented hotels.

"Among the listed projects one still finds the ‘Asia Asia' hotel project with nearly 6,500 guest rooms scheduled to open in the coming years," it said.

Top 11 cities worldwide

Benefit

Meanwhile, the geo-political unrest in the Middle East and North Africa (Mena) region, helped somewhat to boost Dubai's hotels sector.

"It is clear that Dubai has benefited from the unrest in Egypt, Tunisia and Oman, which may explain the buoyancy in occupancy rates," said Kyriakidis.

Also, having experienced a significant decline in 2009 and 2010, the average trading performance of Dubai hotels saw an improvement in the first four months of 2011, according to JLL. It said RevPAR levels in Dubai hotels showed a five per cent growth over the same period in 2010, exceeding $200 year to date as of last April.

Although Dubai still leads in terms of hotel construction, the largest hotel projects set to open within the next two years are in Las Vegas, according to Tophotelprojects.com estimates.

It adds that the German capital, Berlin, is expected to be flooded with nearly 10,000 new rooms.

The study reveals that hotel managers in Berlin are increasingly under pressure with its 49 new projects and 9,800 new rooms.

The prestigious Waldorf Astoria hotel (232 rooms) is under way, besides other projects.

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