Interpreting Middle East Economic News and Analyzing Market Trends

Dubai hotel occupancy rates plunged in July to lowest level in 18 years

Dubai Hotels

Skyline of Dubai Marina

Bloomberg just reported that Dubai hotel occupancy rates plunged in July to an 18 year low.  While July is typically a slow month for visitors because of the unbearably hot and humid weather, this July was especially bad.  What was the reason?

Here’s the story from Bloomberg:

Dubai’s hotels had the lowest occupancy in at least 18 years in July, standing more than half empty, as more rooms were created and demand declined, according to research firm STR Global.

Occupancy declined 11.8 percentage points to 45.4 percent from a year earlier, STR Global said in a report dated yesterday. That’s the lowest since the company began tracking the Dubai hospitality market.

Dubai, which built some of the world’s most recognizable hotels such as the sail-shaped Burj al Arab, plans to almost double the number of hotel rooms by 2020 as it expects a surge of visitors ahead of the World Expo that year. The emirate is targeting about 160,000 rooms, many of them in the three- and four-star category rather than the luxury segment, Helal Saeed Almarri, director general of the Dubai Tourism and Commerce Marketing, said in March.

“As July is one of the hottest months within the region and coincides with the fasting month of Ramadan, the city had an overall negative trend, on top of growing supply,” Elizabeth Winkle, managing director of STR Global, said in the report.

Read the full story here.

The biggest driving force behind the drop in visitor this past July was the holy month of Ramadan, which hit smack in the middle of July ending on the 27th of the month.  Hotels in Dubai are used to the drop in demand in summer as few tourists can weather the extreme heat, but they still manage to draw visitors from other nearby Gulf countries.  Why then would visitor numbers drop so much this year? 

 

Ascot Hotel Dubai

Ascot Hotel Dubai

 

I guess the bigger question is why do most visitors from nearby countries visit Dubai in the first place?  Next year Ramadan starts in the middle of June and ends in the middle of July so I guess Dubai hotels will suffer from low occupancy rates in both June and July in 2015.