Hotel supply will continue to exceed demand

Lowering average daily room rate is a by-product of hotel supply increase in a bid to maintain occupancy levels

Owners, Demand and supply of dubai hotels, Dubai hotel, Issam abdul rahim kazim, Str global data, The hotel show 2015

With more hotel projects beginning daily in the region, Dubai is booming and even more supply is on the way. 

“A total of 11 properties have opened from January to July this year in Dubai, adding to the existing 95 thousand plus keys already available in Dubai,” said Issam Abdul Rahim Kazim, CEO, DTCM.

Following Al Kazim’s address, the first panel discussion of the Hotel Show's Vision Conference, focused on the mega trends in Dubai’s hospitality industry.

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Amongst the panel were Philip Shepherd, partner, PwC Middle East Hospitality & Leisure, Philip Wooler, area director Middle East & Africa, STR Global; Caroline List, international sales manager, Tophotelpojects and Martin Cooper, head of real estate, Deloitte.

The panel actively discussed the various current trends in the market and how it has positively and negatively affected the hospitality sector. “There are 267 hotel projects currently under construction in the Middle East, whereas an additional 98 projects are set to open shortly,” said List.

“The demand and supply is at an interesting stage, currently we have a scenario where supply is outpacing demand around 2%. This is because of the projects under construction that are nearing handover and beginning operations,” said Cooper.

While in most markets it would have been a matter of concern, the experts believe that the supply-demand imbalance will continue to the run up of 2020.

“Occupancy levels have only dipped by 0.9% as of September 2015, while ADR has fallen 8.1%. Meanwhile, RevPAR has dipped and stands at -8.9%,” said Wooler.

However the experts are not too alarmed by this modern trend in Dubai’s hospitality industry.

“We see that occupancy levels (which currently stand at 76.7%) have not dipped much. And, this is down to lowering the ADR. Hence, it is not something to be alarmed about,” Cooper added.

 

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