Hotel occupancy rates in Dubai dropped to 79 percent in 2008, the lowest level since 2004, with a decline in demand from Europe due to the financial crisis, a consultancy firm said on Monday. Hotel occupancy last year was five percent lower than in 2007, which saw rates soar to 84 percent, Jones Lang LaSalle (JLL) said in a report.
"Over the period between July and December 2008, occupancy rates fell by approximately seven percent," JLL said. "This came as a result of the new supply in the market, as well as the softening in demand from key European source markets brought about by the dollar appreciation and the financial crisis."
Dubai has embarked on extensive construction projects, boasting three palm-shaped islands off its coast as well as what is tagged as the world's tallest tower and the seven-star sail-shaped Burj Al-Arab hotel. The emirate formerly said it plans to attract 15 million tourists by 2015 but the global economic downturn has forced many tourists around the world to scale back their travel plans.
Several hospitality and leisure companies in Dubai, which has benefited from an oil-fuelled economic boom over the past six years, have put on hold or cancelled many mega projects. JLL expects the hotel market to perform worse in 2009 than previously forecast and tourist arrivals to be less than Dubai Department of Tourism and Commerce Marketing's (DTCM) goal of 13 percent annual growth. Upscale hotels would be the most at risk as Europeans cut back travel budgets, it said.
According to DTCM, however, in the last week of February, average hotel occupancy for five-star beach hotels was 95 percent with the average room rate at 1,239 dirhams (337 dollars). Dubai hotels received 6,996,449 guests in 2008 compared to 6,951,798 visitors the previous year, earning the emirate 15.25 billion dirhams in revenues, an increase of 15 percent over the previous year, the DTCM said.