'Attract guests with lower rates'

Dubai: Financial turmoil around the world has put downward pressure on GCC hotel rates, said organisers of The Hotel Show that kicked off yesterday.

However, with much of the global economy still struggling to shake off the recession, regional hoteliers said they were beginning to recognise that the vast number of new hotel rooms coming to market could be an opportunity, not a threat.

"There are between 16,000 and 20,000 hotel rooms to enter the Dubai market by the end of the year, which will contribute to producing lower room rates and attracting more visitors to Dubai," Department of Tourism and Commerce Marketing Director General Khalid Bin Sulayem said at the show.

Echoing those sentiments, a study unveiled at The Hotel Show, by Dubai research company Proleads, reported there were currently more than 470 active hotel projects in the GCC countries.

These were the projects that were either not completed, on hold or cancelled.

The report listed the breakdown per country as follows: 258 in the UAE, 83 in Saudi Arabia, 39 in Oman, 35 in Bahrain, 29 in Qatar and 27 in Kuwait.

"Originally when these projects were conceived, the regional hospitality industry was booming," said The Hotel Show sales director Ray Tinston.

"The projects were being built to satisfy future demand.

"However with the global economic downturn still clearly evident and further worries about a double dip recession, hotel owners and operators are now looking at the situation philosophically."

A recent Deloitte analysis of STR Global hotel data revealed that revenue per available room (RevPar) rates in the Middle East were estimated at $131.42 in the 12-month period ending last February.

This compared to $151.51 in the corresponding period ending February 2009.

These figures however were considerably higher than other regions in the world.

For example, Europe recorded an estimated rate of $72.05, and Asia Pacific $79.65, during the same period.

"If the region is to complete globally, RevPar rates need to be competitive," Tinston said.

"That could still benefit hotel revenues.

"By increasing occupancies at slightly lower rates, operators can still capitalise on the peripheral food and beverage spend."