Efforts on to Turn Tourism Tide

A huge SOS marketing effort, which has been likened to that seen in the wake of 9/11, is being drawn up in regular meetings between officials from Department of Tourism and Commerce Marketing (DCTM), hotel managers, tour operators and shopping malls.

Occupancy rates for luxury hotels are currently around 60–70 per cent, but could fall to 25-30 per cent after the New Year, according to two industry sources.

“The Dubai Department of Tourism is working on a huge initiative,” said Sunny Augustine, Director of White Sands Tours and Travel and party to discussions with the Department of Tourism and Commerce Marketing (DCTM). “We are holding regular meetings between travel agents, malls and hotels, trying to work together to offer attractive packages.”

However, many high-end hotels in Dubai are preparing for hard times. “No doubt, the crisis is affecting all aspects of the global economy,” said Robert Zogbi, general manager in Dubai of the international five-star deluxe hotel and resort chain Grand Millennium.

“In Dubai, it is the property and the tourism sectors. Hotels are bracing for more difficult times.”

Zogbi said with Dubai losing some of its lustre as the preferred destination forinternational conferences, exhibitions as well as for leisure travellers, hotels next year will struggle with filling their capacities.

Some hotels are already experiencing a significant decline in bookings. A marketing director of another deluxe five-star hotel said: “Usually, the fourth quarter would be the peak months for hotels and serviced apartments with corporate clients either booking for their annual holiday gatherings or planning sessions. Many don’t want to admit it, but many facilities are becoming idle.”

According to Alpha Tours chief executive Ghalid Aridi the effects are already quite pronounced. “People have stopped coming to Dubai,” he said. “It is high season; we should be seeing occupancy rates of 80-100 per cent. Instead, we are seeing rates of 30–35 per cent in some places.”

Ramesh Kumar, sales manager for Dhow Palace Hotel in Bur Dubai, said that hotel occupancy was down to 60 per cent, from 85 per cent at this time last year.

Director of sales for Sofitel Hotel, in Deira, Saleh Farajat, said the occupancy rates had declined by five to seven per cent from the previous month.

One job seeker said he had applied for a position at the Madinat Jumeirah but he had his offer letter withdrawn on the grounds that the company had frozen employment in the wake of the financial crisis. A spokesman for Jumeirah Group, who own the luxury hotel, would not confirm or deny whether this was the case.

Between 2008 and 2011, around 133 new hotels will be completed in the UAE, adding around 42,400 rooms.

Richard Riley, CEO of Abu Dhabi National Hotels, said the emirate had fewer hotels than Dubai and occupancy levels weren’t affected as much. The slowdown in demand could cause a slowdown in development of new hotels.

Zogbi hesitated to talk about the fate of competition in Dubai but said several, if not most, are going back to their drawing boards.

“At times like these, it would be natural to revisit expansion plans and revise feasibility studies and planning processes. The second phase of development is likely to be pushed back. People are waiting to see the effect of the crisis and how much of arecession it will be and where it is going to hit hard,” Zogbi added.

For one, Zogbi believes the number of three to four-star hotels will increase.

“With more budget-conscious customers, and with tour operators tapping mass tourists, there will be a need for cost effective hotels,” Zogbi said.

Upscale hotels in the meantime, will be jostling for a shrinking customer base.

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