September 16, 2009 - DUBAI -- Dubai's hotel industry will experience a significant boost in the fourth quarter or early 2010 after having suffered a sharp decline in average hotel room rates in the first half of this year, hotel industry executives said on Tuesday.

Fallout from the global economic downturn hit the Middle East later than the rest of the world, with a slowdown only becoming apparent in the fourth quarter of last year. The downturn struck the hotel business much harder in Dubai than in Abu Dhabi.

Dubai hotels have become more attractive, as the average price of a hotel room in the emirate tumbled by 26 per cent in the first half of 2009 compared with the same period a year ago. The average global room rate fell at the same time by 17 per cent, according to the latest study of Hotels.com's Hotel Price Index. Hotels.com is part of the Expedia group, an online travel agency.

"Dubai has seen one of the greatest drop in rates, making it an even more attractive tourist destination, while hotel prices in Abu Dhabi have also fallen significantly," Walter Lo Faro, Expedia's Director of Market Management for the Middle East and Indian Ocean told Khaleej Times on Tuesday.

"As a result of the economic downturn we have seen a change in the profile of tourists visiting the UAE: Fewer visitors are coming from the UK and Russia, while we are seeing more tourists from Italy and the US," Faro added.

US hospitality research firm STR Global said last month that in the first half of 2009 hotels in Dubai saw the biggest drop in revenue of any city in the Middle East.

The report said occupancy rates in Dubai hotels fell by 12.9 per cent on average compared to the year-earlier period, while revenue per available room plunged by 35 per cent.

"Rates (in Dubai) have gone down by around 20 to 25 per cent in the first half, but it depends on hotel to hotel, as room rates of some three- and four-star hotels dropped more than 30 per cent," said Raj Bhatt, Director of Hozpitalityplus.com, a hospitality networking site.

The hotel market in Abu Dhabi, primarily a business destination, stayed relatively buoyant, maintaining high numbers of business travelers.

By the second quarter of this year, however, room rates started dropping in the capital city as the economic downturn affected more business travellers. The picture in Dubai was very different. Hotel prices in Dubai fell steeply in the first quarter and continued sliding, though more slowly, in the second quarter, as hoteliers adjusted to the changing economic situation and began offering more promotions to try to attract customers.

Raj Shetty, Chairman and Managing Worker of Ramee Group of Hotels & Resorts, said that an increasing inventory of rooms in both Dubai and Abu Dhabi is also "a major challenge, as the new hotels means more competition in the market."

Among the hoteliers planning to open new properties this year in Dubai or Abu Dhabi are Sofitel, Kempinski, Ibis and Mövenpick, Address Hotels and Resorts, The Armani hotel, Rotana Hotels and Media One. An additional 10,984 rooms are forecast to come on the market next year, according to Lodging Econometrics, a US research provider.

Average room rates decreased by 30 to 35 per cent during the first half of 2009, said Ramee's Shetty. In this same six months, the number of hotel rooms in Dubai increased by 17 per cent to 58,147, compared to the first half of 2008, according to Dubai's Department of Tourism and Commerce Marketing.

The current total comprises 40,943 hotel rooms and 17,204 hotel apartment rooms.-- [email protected]

-----

To see more of the Khaleej Times, or to subscribe to the newspaper, go to http://www.khaleejtimes.com.

Copyright (c) 2009, Khaleej Times, Dubai, United Arab Emirates

Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NASDAQ-NMS:EXPE,