At the beginning of 2015, Dubai had approximately 94,000 hotel rooms available, according to the GCC Hospitality & Leisure-Recreation 2016 report. Earlier this week, it reached 100,000 rooms. And by the time the Dubai Expo gets underway in October 2020, that number will have jumped to an estimated 164,000.
The Tourism Vision for 2020, a plan to help develop Dubai’s tourism industry with the ultimate goal of getting 20 million visitors to visit the Emirate each year by 2020, was approved three years ago, and has helped boost infrastructure and hotel development since then. Dubai announced initiatives for developers to open hotels in the Emirate, prompting a rush to secure permits. Ever since, global brands have been vying for top spots throughout Dubai, and for the United Arab Emirates as a whole.
More than 200 hospitality and leisure-recreation projects valued over $100 million each are currently being built in the UAE, with a combined value of $83.8 billion. These include the $6.8-billion Firdous Sobha in Umm Al Quwain, The $1.5-billion Dubai Eiffel Tower and the $1.8-billion Royal Atlantis Resort in Dubai.
Major brands have been building their footprints in Dubai for years, but have stepped up expansion plans as the Expo date draws closer. Jumeirah, for example, has a solid pipeline for the Emirate: The Jumeirah Al Naseem, with its 430 rooms, is set to open in Dubai next month, followed by Jumeirah at Saraya Bandar Jissah in Oman and Jumeirah Sa'adiyat Island in Abu Dhabi, both due to open in 2017.
Over the summer, Rezidor Hotel Group, part of the Carlson Rezidor Hotel Group, signed deals for two new hotels in Dubai. The Radisson Blu Hotel, Dubai Waterfront and the Radisson Blu Hotel, Dubai Canal View will open in 2017 and 2018, respectively. In January, the company announced the Radisson Blu Residence Al Sufouh for Dubai as part of a partnership with Al Reem Real Estate Development in the first quarter of 2017. In March, the company announced plans to bring the Radisson Red brand to Dubai in partnership with the Dubai Silicon Oasis Authority. The 171-room Radisson Red Dubai Silicon Oasis is expected to open in Q3 2018.
Rotana, meanwhile, announced plans to open close to 1,000 new rooms in Dubai, and Hilton is set to open a 247-room Waldorf Astoria hotel in the Dubai International Financial Centre next year. The company has signed a management agreement with Ward Holdings for the property. And for the midscale market, The Al Khoory Group's hospitality division is planning to develop three properties with 1,100 rooms in Dubai by the end of 2019.
The Value of Dubai's Hotels
According to the GCC Hospitality & Leisure-Recreation 2016 report, the hospitality sector in the Gulf states is currently worth $126.8 billion, comprising projects related to hotels, hotel apartments, and resorts.
The leisure and recreation sector, including projects related to cinemas, theaters and auditoriums, golf courses, race courses, parks, stadiums, theme and water parks, animal reserves and zoos, sports clubs and facilities, museums and galleries, has a combined estimated value of $52 billion.
But Can It Last?
While the 20-million-visitors goal is admirable, and while the Expo will undoubtedly bring an influx of visitors to Dubai, the development plans may be premature. As noted recently, some reports are indicating that Dubai’s hotel industry could already be oversaturated, with occupancy and room rates already affected.
For this year, the gross operating profit per available room is expected to drop 23.4 percent compared to last year, according to Hotstats. In the short term (2016 to 2017), Deloitte expects Dubai’s supply/demand gap to widen, and the declines are poised to continue into 2018.
But not everyone is pessimistic. Dubai Tourism expects occupied room nights in hotels and hotel apartments to reach 35.9 million, representing a 10.8-percent compound annual growth rate from the end of 2015 to the end of 2018. As such, the agency expects overall room supply to reflect similar growth, reaching 134,000 rooms by the end of 2018.