Counter Point: Hotel sector in Dubai doing brisk business

Reviewing the statistics from the Dubai Department of Tourism and Commerce Marketing for the current year, the numbers as of September do look encouraging.

As of the end of September the number of hotel guests was 4.10 million, an aggregate of over 11 million room nights.

In 2003, hotel guests totalled 4.98 million and with some of the strongest quarters still to be counted one could anticipate another 1.2 to 1.3 million guests to be added, bringing the total to more than 5.5 million for the year.

The hotel industry continues to grow. Last year hotel revenues were Dh4.02 billion compared to Dh 3.41 billion in 2002 and with strong occupancy numbers in the five-star hotels the chances are that revenues will be close to Dh4.5 billion this year.

The strong growth is due largely to the influx of European travellers.

The number of visitors from the United Kingdom (441,000) was more than that from India or Pakistan and almost 80 per cent of their combined total.

The summer months traditionally saw hotels, including the luxury end of the market, offering substantial discounts, but they have stopped doing so this past year as the growing tide of sun and sand tourists from Europe has accounted for an increasingly larger share of the market.

As of last September, visitors from Europe excluding the CIS and Baltic states totalled 939,266 hotel guests, taking close to 25 per cent of the total.

Iran topped the market in the Asian component, with 281,179 visitors, more than from India and Pakistan.

It is misleading to say that hotel guests comprise the entire tourist market since a considerable number of visitors do not stay in hotels but with friends and families.

I estimate is that this is also a large component of the market, accounting for perhaps 20 per cent.

The contribution that these tourists make may not affect the bottom lines of the hotels, but visitors do spend considerable amounts of money during their stay and this is becoming a significant contribution to Dubai's economy.

Statistics

One interesting aspect of the statistics is that the average stay by hotel guests is 2.77 days.

While some of this is accounted for by GCC travellers, who typically stay for just one night, (GCC hotel guests totalled 855,879), the rest comprises business travellers.

While the statistics are not broken down in detail, it seems that European travellers stay four or five nights, especially at the beach and resort properties.

One aspect of the development of the tourist industry is the need for more cultural and entertainment activities and these are beginning to emerge.

It will be interesting to see the impact that Dubailand will have on the average length of stay of foreign visitors.

I understand that in the next 18 months close to 16 hotels will be opening and while this may create some fears of oversupply, the growth rate year on year is close to 20 per cent, making it likely that the additional rooms will be absorbed with ease.

In a sense, 2005 will be a crucial year for Dubai as it strives to consolidate its position and continue to pursue its next target of 7.5 million visitors.

My guess is that by the end of 2006 this figure will be either achieved or within reach.

That is a healthy target and even if the length of stay is only three days the total room nights will exceed 22 million.

The writer is the UAE-based President of Sher Consulting.