Dubai will sustain its supremacy in the hospitality industry across the Middle East and Africa (MEA) as it reported the highest number of rooms under construction in the region last month.
According to the latest report by consultancy firm STR Global, approximately 14,385 rooms in 49 hotels of Dubai were under construction in March, which is the highest compared to other leading regional markets like Doha (6,612 rooms in 24 hotels) in Qatar, Makkah (5,936 rooms in 10 hotels) and Riyadh (5,477 rooms in 21 hotels) in Saudi Arabia. The region reported 77,924 rooms in 315 hotels under construction for the month.
“As many as 147,680 rooms in 626 hotels are under contract in the Middle East and Africa region. This represents a 7.6 per cent year-over-year increase compared with March 2014 and a 22.6 per cent increase in rooms under construction,” according to the STR Global Construction Pipeline report issued on Wednesday.
The under contract data includes projects in construction, final planning and planning stages, but does not include projects in the unconfirmed stage.
Industry people believe that the hospitality industry should focus on total revenues and profits rather than room revenues only as the increasing room supply will intensify competition in coming years.
Mohammed Khoori, general manager, Golden Sands Hotel Apartments, said hotel supply in Dubai has seen a substantial growth in 12 months as the emirate’s economy is growing and visitors to Dubai have steadily increased over the years.
“These two factors means that more hotels are needed. Dubai is also growing as a destination as it adds new reasons to visit, with the onset of medical tourism as well as the upcoming theme parks that will be one of the first in the region,” he said. “Many new projects are under way.”
To a question, he said additional supply will certainly make the market more competitive, especially since many new hotels are three or four-star. “Revenue per available room will most likely see a dip as a result,” Khoori said.
Jihad Fattouh, director of sales and marketing, First Central Hotel Suites, said the hospitality industry received a major boost after Dubai won the bid for World Expo 2020, which became a catalyst to revamp and strengthen the day-to-day operations of hotels in Dubai and the Middle East.
“It will surely ignite more healthy competition within the industry that drives every hotelier and hotel management group to surpass and refine their service, standards, and overall operations — which make up the backbone of this strong, ever-growing industry,” Fattouh said.
He said Central Hotels is rapidly expanding with properties to be opened in The Palm Jumeirah, the Burj Khalifa district, Tecom and Deira Islands in the coming years. “All of these projects are focused on the high demand for luxurious accommodation in prime locations which is cost-effective and available to every traveller,” Fattouh said.