THE OFF-PEAK YEAR
By Ehtesham Shahid • Jul 21st, 2009The Dubai Department of Tourism and Commerce Marketing (DTCM) has a different story to tell, however. According to the department, hotels in Dubai saw a five percent increase in the number of guests in the first quarter of this year. “A total of 1.99 million guests stayed in Dubai hotels in the first quarter of 2009, five percent more than the corresponding period in 2008,” a DTCM statement said. According to them, the number of operating hotels and hotel apartments rose to 519 in the first quarter of 2009, up from 475 during the corresponding period in 2008, while the revenue of hotel establishments during the January-March 2009 period was 4.26 billion dirhams ($1.2 billion).
Like many others in his sector, Hytonen of Rezidor is unsure about how long this situation is likely to continue. “There has been discussion that 2010 would be a more destabilizing year and [the economy] will pick up 2011 first half. I think it is going to get worse before it gets better, this is at least the feeling. I think the market is not going to get bigger, so we have to fight harder to get our piece of the cake,” says Hytonen.
There is also a disconnect with regard to the supply-demand equation in the hospitality sector. Hytonen notes there are around 45,000 hotel rooms in Dubai today, another 13,000 are estimated to come online next year, and 10,000 more by 2011. He says a lot of these estimates are based on what was in the books last year. “I do not believe operators have adjusted and consolidated the situation yet. We will get a better and more accurate picture by the end of the year,” he adds.
The numbers aren’t dipping everywhere, though, because there are segments within the sector making hay despite the gloom. The food and beverage segment remains largely intact, while online travel booking is actually looking up. Tom Rowntree, the vice president commercial at InterContinental Hotels Group, argues drops in numbers can be offset by other more vibrant segments. “The MICE (Meetings, Incentives, Conventions and Exhibitions) sector continues to be strong, and if you look across the region there will continue to be a market despite global economic downturn. Moreover, we are in the market on a long term,” he says.
During an economic downturn, he suggests, there is a short term or a tactical approach and a more long-term strategy positioning. “The more tactical focus necessitates looking at promotions and campaigns to stimulate the market and activate the opportunities that exist,” says Rowntree.
The growth in online demand is a far more interesting story. Diego Lo Fuedo, the director of Hotels.com, says there has definitely been a slowdown in general, but it is different for the online segment. “In times of crisis, people tend to go digital, which is not just a faster way to communicate but also gets you a variety of offers,” he says. So if tourism is expected to grow by 4 percent to 7 percent, the online shift is growing at around 15 percent to 20 percent, depending on the geography. Lo Fuedo also rules out lack of Internet penetration as a problem. “There is always a learning curve,” he says. “The Internet levels increased in the West only in the last 10 years. The shift in information channel to transactional channel is only recent,” he says.
