City hotels do not expect to turn away customers during the Dubai Shopping Festival as in some previous years and are offering special deals to attract tourists.
The annual retail promotion, now in its 21st year, started on January 1 and runs until February 1.
Industry heads tell GN Focus they expect occupancy to hover around the 80 per cent mark this DSF, while average room rate (ARR) is predicted to be the same or lower than in previous years.
“We are expecting a 5-6 per cent drop year-on-year in ARR, while hotel occupancy is likely to be in the 80s,” Babu Sathar, Assistant Revenue Manager at the Dusit Thani Dubai, says in an email interview.
At the rebranded Nassima Royal Hotel on Shaikh Zayed Road, Cluster Director of Sales and Marketing Adib Al Khoury puts occupancy between 80 and 85 per cent, with ARR at about Dh900.
Hossam Nabil, Director of Sales and Marketing at the newly expanded Millennium Airport Hotel Dubai, is more confident, projecting occupancy at 90 per cent for the 341-room property.
Rooms aplenty?
Increased room supply is cited as one main reason for the impact on business. The emirate now has in excess of 65,000 rooms following the opening of the Intercontinental Dubai Marina and St Regis Dubai last year, according to data from JLL. A further 30,000 rooms are expected to come on stream in the next two years.
“The increase in number of hotel rooms in the area is the main reason for this [lowered] performance,” Sathar says.
For four- and five-star hotels revenue per available room (RevPAR), a measure of profitability, dropped to Dh754 from January to November last year, down 6.2 per cent compared to the same period in the previous year.
External factors
However, a variety of other macroeconomic factors are also at play, including currency movements in key source markets and oil prices.
Speaking of how the weak economic climate affected forward bookings, Al Khoury says, “Overall we are experiencing a shorter lead time: people tend to book more and more at the last minute.
“Due to the oil barrel price the contribution in figures given by the gas and oil segment has decreased, while the euro’s weaker exchange rate has negatively influenced the German market.”
Analysts caution the trend will continue over the course of the year.
Christopher Hewett, Associate Director at TRI Consulting, a management consultancy focusing on the hotel, leisure and property sectors, told Gulf News in an earlier interview that occupancy will likely drop 1-2 per cent in 2016, while average daily rates will be down 5-7 per cent.
“The drivers include increasing supply, particularly from the mid-market segment, and the continued lower purchasing power from key source markets [such as Russia and Europe],” he said.
Other factors shaping overnight stays in the emirate this month include mid-term school holidays in Saudi Arabia and the Orthodox New Year on the leisure travel front, while the Arab Health Congress, the region’s largest health-care trade show, remains the biggest business event at the end of this month.
Best packages
As is traditional at this time of year, hotels are ramping up their marketing efforts and offering a range of deals to boost occupancy, from package room rates to added services.
“During the Shopping Festival, tourists expect convenience and value for money,” says Nabil. “We are actively utilising our website, social media platforms, and other diverse sources of marketing,”
The Millennium Airport Hotel’s Have a Nice Weekend package offers a 10 per cent discount on the best flexible room rate, 20 per cent discount on food and drinks, breakfast for two and free Wi-Fi, while the Nassima Royal is giving those staying two nights a free third night, inclusive of breakfast, room upgrades if available, and shopping vouchers.
Elsewhere, the all-suite Oberoi Dubai has launched a Shop Till You Drop package valid through to February 2. Priced at Dh1,400 plus taxes, the deal includes breakfast, room credit of Dh200, 24-hour butler service, shopping concierge, and a shopping bag collection service three times a day from the Dubai Mall.
Enhanced services at the Dusit Thani include a free shuttle service to Dubai Mall and Mall of the Emirates, as well as select shopping privileges.
The Sheraton Dubai Mall of the Emirates Hotel is offering those booking suites private client services at select stores, in-room fashion previews and a personal shopper and style consultation with afternoon tea.
“DSF has consistently helped business over the previous years and this year will be no different,” Sathar says.
Tough goal?
But how far the city’s hospitality sector is successful in attracting more tourists remains to be seen.
Dubai aims to draw 20 million tourists by the year 2020 when it hosts the World Expo.
As more hotel rooms come on stream in the run-up to the event, declining business from traditional markets such as Europe should be offset by an increase in travel from emerging markets such as India and China, which are benefiting from sustained lower oil prices and increased purchasing power, according to forecasts from EY.
“Overall, the growth in visitors to the region is expected to keep pace with hotel room supply,” says Yousuf Wahbah, Partner and Head of Mena Transaction Real Estate, EY.
“This is due to a number of factors including an increasing demand for enhanced medical tourism, theme parks, retail outlets and current preparations that are under way for the Fifa World Cup 2022 and Dubai Expo 2020.”
GCC travellers expected
The Dubai Shopping Festival is expected to attract more visitors from across the GCC and fewer Europeans, hotel executives say.
At the Dusit Thani Dubai, the GCC remains the key focus market — despite a slight decline in overall business from the region, a spokesperson said.
At the nearby Nassima Royal Hotel, an executive identified Saudi Arabia has the key market, because the timing of an annual school break coincides with the DSF.
“We do expect visitors to come mainly from GCC and Saudi markets. The holidays in Saudi Arabia are expected to boost the figures of the Saudi market, already stated as Dubai’s most relevant market by the DTCM authorities,” a Nassima Royal spokesperson said, adding that the hotel is seeking to shore up business from the UK, Germany and China.
“We are strongly advertising in these markets,” he said.
Besides the Middle East, target source markets at the Millennium Airport Hotel include Africa and Europe.
But hotels can do more to bring in tourists, says Al Khoury.
“Designing special promotions and giving appealing benefits to travellers is only the first step.
"We need to increase the online presence and take advantage of new important tools as marketing campaigns through social media specially targeted at strategic markets and based on people’s interest for shopping.”
