Page 21 - Arabian Business

COMMENT
of average rates, the impact
has yet to be fully felt. In 2017
up to November, according
to STR, annual room supply
in Dubai grew less than six
percent. So if hotel owners
are starting to feel the pinch,
one has to fear that the worst
is yet to come.
The RevPar squeeze
The question being asked
now is whether there will
be a significant downturn in
RevPar in 2018/2019. Being
realistic, it’s likely. No market
in the world, with the u Renaissance Downtown Hotel opened to great fanfare in November, 2017 How a market fares in the
exception of Las Vegas in the
boom times, at least to my
recollection, has added 50
percent room inventory
without seeing an impact on
hotel performance metrics.
Moreover, there are some
strong potential headwinds
for Dubai in 2018 – increased
competition from new
attractions in Abu Dhabi and
RAK; the implementation
of five percent VAT, which
hotels in a weakening market
may not be able to pass on to
consumers; and the gradual
recovery of Turkey and North
Africa from internal turmoil,
which had diverted tourists to
the safe haven of the UAE.
Does that make it all
doom and gloom? Not
really. I remember asking a
head of strategy for a major
Dubai firm in 2009 how the
emirate would fare, given
the meltdown in financial
and property markets and its
lack of oil and gas. “We’re not
worried,” he said. “Basically,
if you live between Cairo and
Karachi and you want to have
fun, you’ll come to Dubai”.
The market has of course
borne out that prediction
over the past decade,
recovering spectacularly
from the global financial
arabianbusiness.com
q THERE ARE MORE DEMAND DRIVERS
BEING CREATED – NEW THEME PARKS, NEW
SHOPPING EXPERIENCES AND SPECTACULAR
NEW BUILDINGS LIKE THE DUBAI FRAME”
a historical offering which
Dubai can’t match.
However, the biggest
determinant of success in
the long-term may be Expo
2020. It will see a surge of
visitors during the year but
many markets fare badly
after a major event like an
Expo, Olympics or World
Cup. Why? Because too many
hotel rooms and serviced
apartments get built to cater
for that short-term rush
of demand, leaving a big
overhang afterwards.
aftermath depends a lot on
crisis. Moreover, there are how good an impression it
The Gulf and more demand drivers being has made during the event
Indian Ocean Hotel created – new theme parks, itself. I recall trying to sell a
new shopping experiences, hotel in Barcelona in 1994,
Investors’ Summit spectacular new buildings two years after the Olympics,
Some of this year’s seminars like the Dubai Frame and of when city-wide occupancy
course, though a few years had fallen to 48 percent. It all
Investing in frontier off yet, another record- looked grim. However, the
markets – dangerous breaking new airport. Nor is city had done an amazing job
hype or solid profi ts? it clear that RAK’s push into in positioning itself for the
When: Monday, January 29 adventure tourism or Abu Olympics and became one of
Time: 3.05pm-3.45pm Dhabi’s into cultural tourism Europe’s favourite short-haul
will be a negative – they may destinations thereafter. So,
What value beyond well offer families the scope it’s all to play for if Dubai can
distribution can OTAs offer for more varied and longer do the same.
owners and hotel operators? stays in the UAE. Given the Emirates’ track
When: Monday, January 29 Equally, the decline in oil record of success to date, my
Time: 3.45pm-4.15pm and gas prices which hit the strong feeling is that it will do
business side of the visitor just fine. Of course, billions
Is Dubai in danger of being equation is also coming to of dirhams of investment
overbuilt and could it be an end, which should help depends on that and for a
heading for a hard landing? midweek occupancies as well. more in-depth discussion on
When: Tuesday, January 30 So even if there is a short-term the market and the challenges
Time: 9am-9.40am dip, it will correct itself. faced by hotel developers
and investors, the upcoming
From motor oil to tanning The medium term Gulf and Indian Ocean Hotel
oil – can the Gulf markets Looking further ahead, the Investor Summit will provide
successfully diversify? competition will only grow. the perfect forum, with 90
When: Tuesday, January 30 If Saudi Arabia really develops senior executives locking
Time: 2.10pm-2.45pm a string of islands in the Red horns to debate the best way
Sea, that will be a challenge forward.
The merging of hotel and for the “sun, sea and sand”
residential offerings – a good European and Russian Gulf and Indian Ocean Hotel
extension to our business or markets. Sri Lanka and Investor Summit
a mortal threat to it? Zanzibar, as they develop, When: January 29-30
When: Tuesday, January 30 may pull away potential Where: Yas Viceroy, Abu Dhabi
Time: 3.25pm-4pm Chinese guests and they have Tickets: giohis.com
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