| Whatever the outcome of the Dubai World financial | | | | the number of planned projects in the Middle East |
| crisis, one thing is certain. Hotels in Dubai are going to | | | | hotel industry declined by 17 percent over last year. |
| have a tough time in the months, maybe even years | | | | Amazingly, this region has still not lost its appetite for |
| ahead. It doesn't take a psychic to see why. As | | | | taking risk, compared to a 21 percent decline seen |
| economic activity has slowed down in the housing | | | | across Europe. |
| and financial sectors, it has also affected the other | | | | But one really wonders whether the grandiose plans |
| segments of the society. Many expatriates have | | | | of the ruler and the Government of Dubai will really |
| been forced to leave following the termination of | | | | bear fruit and if so when. Dubai has clearly erred on |
| their employment contracts. Some have left behind a | | | | the side of plenty and the excess capacity may |
| lot of unpaid bills, credit cards and keys in the ignition | | | | force it to not only lower its rates but also keep |
| of their parked cars at the airport. It's all part of life. | | | | them consistent and realistic for a long time to come. |
| One may argue that with the sub-prime mortgage | | | | The present room rates at some hotels are still too |
| crisis in the USA escalating out of proportion and | | | | high, as they are still living in a fool's paradise instead |
| engulfing the financial sector as well, it was only a | | | | of waking up to the reality of what has transpired in |
| matter of time before its effects were felt all over | | | | the last few months. Those that have indeed woken |
| the world. And Dubai was invariably affected starting | | | | up and smelt the coffee stand to gain, and the |
| in mid 2008. | | | | sooner the rest of Dubai catches up, the better. |
| Following the downturn in the housing, construction | | | | By some estimates, Dubai hotels have lowered their |
| and financial sectors, allied sectors like shopping, hotel | | | | room rates between 25 to 30 percent, in a bid to |
| and others have definitely felt the impact. In the | | | | shore up occupancy rates. This strategy has certainly |
| glory days of the recent economic boom that | | | | worked, as for expatriates in search of a job who |
| culminated in June 2008, hotel occupancy rates in | | | | are without living quarters, finding affordable hotel |
| Dubai were almost 80 percent despite the high prices | | | | accommodation is the only other alternative. To |
| quoted. As business was brisk and there was a | | | | compete effectively, the average hotel in Dubai has |
| multitude of opportunities all over the emirate, this | | | | to reduce its rates. Business is slow, so hotels in |
| inconvenience was just worked into the equation as | | | | Dubai are not really filling up. One can easily see this if |
| a part of the cost of doing business in the Middle | | | | one compares occupancy rates at apartment hotels |
| East. | | | | in Dubai or Dubai hotel bookings of last year as |
| Now however, it is a distinctly different story. With | | | | compared to this year. In fact reports show that |
| the economic bubble having burst, the future | | | | Dubai hotels booking rates are in sharp decline and |
| suddenly does not look that rosy. Recent reports by | | | | the industry is in a quandary as to what to do about |
| a US based firm, Lodging Econometrics, found that | | | | this issue. |