Challenges ahead for Dubai tourism targets

283 hotels must be delivered by 2020 to accommodate Vision 2020

60 hotels per year must be constructed in Dubai to meet 2020 target.
60 hotels per year must be constructed in Dubai to meet 2020 target.

 A Deloitte report has revealed that Dubai’s target of 20 million visitors by 2020 as part of its Tourism Vision 2020 is on track to materialise only if growth continues at the same, or an increased rate.

The report takes into account the STR Global data which reports 56 hotels under construction or in the final stages of planning in the emirate, meaning 227 additional hotels are required to meet the projected supply by 2020.

The report states reveals that If the development cycle of 36-48 months is factored in, the remaining 227 hotels would need to be completed prior to 2017 for delivery by 2020.

Deloitte Corporate Finance Limited directors Grant Salter and Martin Cooper explained: "Historically Dubai has managed to deliver an average of 14 hotels per year over the last eight years, up to a maximum of 26 hotels in a single calendar year.

“In order to meet the target of doubling the hotel room stock by 2020, this remarkable achievement needs to double to around 60 per year for at least three years, which is likely to be quite challenging."

Other looming challenges are the impact of demand on construction materials, labour and funding, which is likely to drive overall development costs higher.

Additionally, high demand for quality sites will drive an increase in land prices, thereby reducing investor returns.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries.

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