According to experts, the hospitality sector in the UAE is set to pick up ahead of Dubai Expo in 2021 in order to meet demand from the growth of local and international tourists.
Industry experts expect that city hotels will perform better than beachfront properties as Meetings, Incentives, Conferences and Exhibitions (Mice) sector is likely to recover along with the economy’s opening up.
Dubai has been ranked the best place to host international events in the coming months in a recent survey of 4,000 professionals across 130 countries conducted by the Messe Frankfurt.
Trade fairs will play a vital role in a post-COVID restart, it has pointed out.
The study covered a wide variety of industry sectors ranging from automotive aftermarket and industrial security to beauty and cosmetics, showing that 77 percent of respondents regarded Dubai and Germany (41% of respondents) as the safest destinations to attend post-COVID-19 exhibitions.
Christopher Lund, Colliers International’s head of hotels for MENA, expects more than 8,000 hotel rooms to be delayed in the UAE by a year in 2020 due to the significant effect of the outbreak on the sector and subsequent lock downs and restrictions imposed on local and foreign travelers.
“The UAE is expected to welcome an additional 4,700 rooms in the market in the second half of 2020, provided that there would not be any further delays caused by COVID-19. We have seen that over 8,000 rooms have been delayed by a year in 2020,” he said.
The UAE suspended all international flights to combat the pandemic on March 23, resulting in foreign tourist inflows coming to a halt and domestic tourism also shrinking significantly as a result of restrictions on people’s travel.
The number of hotel rooms is projected to increase by approximately 12,000 in the UAE by the end of 2021, according to Colliers International. Many of these openings are projected to be in Dubai, with nearly 8,000 rooms in the emirate opening by the end of 2021.
“Hotels in the UAE continue to be adversely affected due to COVID-19. Hospitality markets have experienced double-digit decreases in occupancy levels. Even with the country slowly opening its borders and reopening flight routes from June 15, international tourist demand for hospitality offerings has not recovered during this summer period.”
Nonetheless, success during the fourth quarter, which is the UAE peak hospitality season, would be the best predictor for recovering foreign tourism demand in 2020, he stressed.
Colliers sees UAE’s hotel supply growing at an annual compound growth rate of 11 percent between 2020 and 2022, adding 26,000 rooms.
Experts say that hotels which remained open for business after the restrictions were imposed had just minimal occupancy levels while research suggests that to break even, a traditional hotel needs to sustain an occupancy of about 40 percent.