A recent visual index compiled by Bloomberg shows off the three cities that are host to the highest room rates in the world. The three cities that top the list are Geneva ($308 per night), Dubai ($273 per night) and Kuwait City ($253 per night). Directly behind them are Zurich at $250 Miami at $245 per night, the most expensive city for lodging in the U.S.
Bloomberg reported that the room costs are high in markets where developable land is scarce and hotel rooms are limited. The numbers at the top of the list are also influenced by an affluent average customer base. This explains why Edinburgh ranks above London, as a more limited supply of low-end rooms in the Scotland city raises expenses.
What it comes down to is the cost of real estate and the availability of hotel rooms,” Nikhil Bhalla, a lodging analyst at FBR & Co. in Arlington, Va., told Bloomberg. “Geneva, as many of the major cities in the world, is land constrained. The cost of development in Switzerland is probably among the highest in the world in part because of the beautiful scenery.”
According to Swiss Info, Geneva is also at the top of the list for five-star hotels. In that category, a room in the Swiss city costs an average of $614 a night. Los Angeles is ranked second on the list of high end properties, averaging $481 per night, followed by Tokyo at $440.
Dubai developer Union Properties is answering the city's call for low-end rooms with a plan to build approximately 1,000 rooms in categories midscale and lower over the next five years, according to Arabian Business. This decision comes as Dubai plans to almost double hotel rooms as it seeks increase annual visitors to 20 million by the end of the decade, when it will host the World Expo 2020.
This influx of affordable rooms could be the answer to occupancy concerns the UAE is facing. Gulf News found that hotels in the UAE posted declining occupancy numbers during Q1 2014 over the same period last year. Properties in Dubai and Abu Dhabi saw occupancy drop 1 percent to 88 and 82 percent, respectively, while occupancy across Al Ain hotels fell 2 percent to 70 percent.
Occupancy is up in other areas of the region, such as Riyadh, which rose 7 percent (to 71 percent). This lends some strength to the argument that what Dubai needs is affordable rooms, and many of them.