Hoteliers say further price cuts could be a dangerous strategy

Hotel room rates in Dubai have come under severe pressure with the decline in business travel and the continuous new supply coming onto the market, which has caused operators to slash rates, industry experts said.

The latest available data from STR Global and Deloitte show that occupancy levels in hotels in the Middle East have declined by 9.6 per cent from April 2008 to April 2009, while revenue per available room (RevPAR), an industry benchmark, has declined by 14.9 per cent.

Sami Al Ansari, Chief Executive Officer of Ishraq Gulf Real Estate (Holding), the company behind Holiday Inn Express in the region, told Emirates Business: "Year to date it's not too bad, the market is averaging close to 70 per cent across Dubai, which is positive in itself. There is huge pressure on room rents, which is driving rates to very dangerous levels. In the beginning of June we saw rates come down even further and unfortunately we have not seen the bottom yet, as it is just the beginning of summer."

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