In the United States, cities whose real estate values rose fastest are falling hardest in these challenging economic times. The same can be said for Dubai in the United Arab Emirates, which has been on a hotel building binge in order to keep up with the demand. But hotel experts caution against hotels discounting too deeply, which is not always best for meeting planners.
According to recent data from STR Global, the London-based arm of Smith Travel Research, a global hotel benchmarking company, Dubai has experienced unprecedented buoyancy over recent years since the supply of hotel rooms has not been able to meet demand. Therefore, according to STR, the market is falling from a fairly high base, which somewhat cushions the blow.
Dubai’s year-over-year changes in revenue per available room slowed dramatically in the second half of 2008. Results for January 2009 show a similar if somewhat more dismal picture, according to STR, particularly for Dubai, where on certain days the fall inyear-over-year was more than 40 percent.
“What we are seeing is the classic knee-jerk reaction to a fall in occupancy with waves of panic pricing. The last thing revenue managers want to do is to suffer twice. Both from the fall in occupancy and then in rate,” said James Chappell, managing director of STR Global. Visit STR Global for more.