• Operators join Dubai expansion

Rotana Hotels said in late March that it wanted to every brand of Rotana in every major city Middle East city.

Dubai is a key focus for the group ahead of the 2020 Expo, with the emirate recently announcing a relaxation of planning laws to accelerate hotel projects.

Omer Kaddouri, newly-installed CEO at Rotana, announced plans to open 50 new properties across the MENA region in the next six years, doubling the group’s portfolio. He told the local press: “We want to get to the next level, which is every brand of Rotana in every major city Middle East city. Probably by 2020 we’re going to be very close to that. We’re working very hard to ensure that all of our brands are in the right locations.”

The company is looking in particular to its mid-market Centro brand for the Dubai market. The emirate is seeing rapid expansion as part of the Tourism Vision for 2020, announced in May last year. It calls for a doubling in the 10 million tourists received in 2012 to 20 million per year by 2020.

Last year saw Dubai hotels welcome more than 11 million guests in 2013 – an increase of just over one million on the 2012 numbers as the emirate moves towards its target of 20 million visitors a year by 2020.

Hoteliers and hotel apartment operators saw total revenues up by 16.1% reaching AED21.84bn (USD5.95bn) for the year.

His Excellency Helal Saeed Almarri, director general of Dubai’s Department of Tourism and Commerce Marketing, said: “A 16.1% increase in revenues for our hoteliers is an indicator of the healthy state of the hospitality industry while an occupancy rate of 82% demonstrates to the hotel investment industry that Dubai is one of the world’s most attractive investment opportunities. In order to provide accommodation for our targeted visitor numbers for 2020, we estimate we need a total of between 140,000 to 160,000 rooms and will work closely with the investment industry to make this happen.”

In February the DTCM announced plans to allocate government land for the development of three and four star hotels as well as a waiver on the 10% municipality fee which is levied on occupancy per room per night for three and four star hotels for “a period of time after opening”; and a reduction of the approval process period for hotel construction to two months from four.

Almarri said: “Much of the 20 million visitors we are targeting will be from the 25 to 55 year age segment across our main regional and global source markets. In our plans to enhance the destination offering, we have prioritised services and products that are specifically targeted at moving Dubai up in the consideration list for the family segment.

“Additionally, we need to elevate Dubai’s overall business destination proposition to be able to transition from being a regional leader to a truly global hub for business tourism. This segment is specifically important to us on two counts: firstly business travellers are 20% of our target traffic; and secondly the 24 to 48 hour travel time that is usual for business tourists is our opportunity to provide a preview to Dubai that will incentivise business tourists to return, for leisure and for longer, with friends and family.”

The news came as Dubai developer Nakheel announced the release of 94 hotel and resort plots on two of the four islands on its revamped Deira Islands project. The group said that the two islands would ultimately add over 23,000 hotel rooms and 31,000 apartments.

Nakheel will master plan and complete infrastructure work ready for third party development on each island.  The developer also plans to build five hotels of its own at Deira Islands.

Nakheel chairman Ali Rashid Lootah said: “By applying the innovative design and engineering that we are known for, we are creating Deira Islands, yet another world-class, waterfront wonder that will further cement Dubai as a global tourism, retail and business hub and contribute significantly to the emirate’s economy for decades to come.”

During the press conference to launch the release of the plots, which will go on sale at the end of this month, Lootah said that Nakheel was currently in the early stages of planning the IPO, which would take place after all of Nakheel’s debts were paid off.

 

HA Perspective [by Katherine Doggrell]: Dubai has thrown itself into its rejuvenation following its near-death experience during the downturn with an enthusiasm that makes Ireland’s bounce-back look like a leaky ball.

Backing this is not just a convincing sales job by the DCTM, but commitment. With planning restrictions eased and land offered to three and four star hotels, the emirate is determined to make it work, and work in the image it has laid out. To ensure that the market is not swamped with more five star hotels, it has even temporarily waived the ‘Tourism Dirham’ tax.

But only for three and four star hotels and only for a limited time, because it is this tax which is helping to fund the growth – Dubai having learned the lessons of debt-based growth. The tax comes in at the end of this month and will be charged across all types of holiday accommodation including hotels, guesthouses and holiday homes, at rates between AED7 and AED20 per night, depending on the accommodation's ranking.

Whereas Dubai has hardly been an example of sustainable growth, it is now in a position to teach other countries a thing or two. In the UK, the hospitality sector’s efforts to secure a VAT cut were effectively nixed by treasury minister David Gauke’s comments that there were no causal links between a VAT reduction and a boost in the sector.

Another approach is required to attract the visitors which the UK needs. Changes to planning are certainly needed to encourage hotel development, but involve years of campaigning, from a sector which does not know how to present a united force. Building a promotional fund through bed taxes may be easier to achieve.

Bed taxes are on the rise globally – February saw Panama City join the locations to consider one – and the consumer is getting used to the idea. Unfortunately the same trade bodies who failed to make a convincing case for a VAT cut are fervently opposed to the idea. Dubai might provide the example they need to act for the future.
 

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