The success story of Dubai’s hospitality sector is souring, with hotel profit margins in January showing signs of the industry feeling the pinch of the economic downturn.
In recent years, the Dubai market has performed strongly compared with the rest of the region as the supply of hotel rooms failed to meet demand. But with the economic crisis cutting tourist numbers, occupancy rates have fallen and prices are coming down.
“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, the managing director of STR Global, a US-based industry research firm.
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