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Dubai Noted as Middle East Leader in Hotel Openings


April 27, 2007 - Lodging Econometrics of Portsmouth, NH, U.S.A., has come out with its forecast for new hotel openings for 2007, 2008, 2009 and beyond for the Middle East. The research includes all 12 of the region's countries and markets and revealed the following:

  • 304 hotel construction projects are being actively pursued by developer groups in the region, having 100,167 guestrooms.

  • 53% or 161 projects are presently under construction.

  • 73 projects are scheduled to start construction in the next 12 months.

  • 70 projects are in various stages of early planning.

  • Projects average 329 rooms in size.

Many countries in the Gulf are moving quickly to diversify their economies. Flush with oil and gas revenues and bolstered with budget surpluses, the fast growing emirates of Dubai and Qatar are developing new business and financial centers. Most are focusing on tourism.

Abu Dhabi hopes to become a cultural destination for the region, while Dubai hopes to become the world's leading international tourist destination for celebrities and other luxury travelers. "These economies are thriving and the hotels are booming. Room rates and Rev Pars are surging," according to the Lodging Econometric research.

New Hotel Openings Will Mostly be Four and Five Star

New hotel openings in the Middle East look to be evenly spread over the next few years: 78 hotels in 2007; 90 in 2008 and 146 in 2009.

Of the 304 projects in the pipeline, 228 having 81,730 rooms, or 82% will be 4- and 5-star hotels. Most will be iconic, world-class structures designed by some of the world's most famous "starchitects."

A few are specifically designed to set new 6-, even 7-star standards of luxury; like Kempinski's Emirates Palace Hotel that recently opened in Abu Dhabi and Jumeirah's Burj al Arab which opened earlier in Dubai.

Dubai - A New Xanadu-is the Region's Leader

Dubai, a powerhouse in the Middle East, is an emirate in a hurry. Committed to becoming the magnet capital provider for the region, it has taken extensive steps to liberalize its economy and to provide business incentives, to attract industry, logistic companies, media, technology, healthcare and financial service businesses to headquarter in Dubai and serve as potential capital users. Dubai has neither corporate nor personal income taxes.

Simultaneously, Dubai is committed to become the newest, most opulent resort destination in the world.

World-class business centers, and office towers and a Manhattan style skyline will establish Dubai as the financial center of the Middle East.

It's their existing inventory of palatial hotels, their development pipeline for more iconic hotel projects, their lavish ideas for the four man-made mega island developments and a wide variety of extravagant tourist attractions and colossal retail malls that will establish Dubai as the most exciting resort destination anywhere.

Dubai has also been noted for its early embrace of the condo hotel concept. Many of the new hospitality properties being developed are condo hotels, with hundreds of investors from all over the world investing in owning the individual suites.

Dubai has 101 of the 304 projects in the Middle East pipeline. Their 41,771 rooms represent 42% of the pipeline total. The average project size is an astonishing 414 rooms.

Tourist inflows were approximately six million in 2006 according to the Department of Tourism. The projection for 2010 is for 15 million visitors. Developers and hotel companies appear up to the challenge.

With more development than London, Beijing, Shanghai and other global hot spots, it's a once-in-a-lifetime opportunity for regional and international brands like Rotana, Rezidor, Marriott, Hilton, InterContinental and Starwood to make opportune decisions for the very long run.

Will Demand and Supply in Dubai Balance Out in the Long Run?

Dubai is like a phoenix rising from the desert hoping for a long, productive economic cycle.

Governmental and private investment is skyrocketing. Infrastructure investments are extraordinary. Investment across office, retail, residential homes and vacation condominiums, tourist attractions and lodging facilities is broad and deep. Everything seems well synchronized.

With a growth rate greater than China, it's a fascinating mix of freewheeling capitalism and unlike some countries in the Middle East, the living is large and the lifestyle avant-garde.

For hotel developers, lodging brands and condo hotel investors, it's an extraordinary opportunity to participate in the largest and certainly one of the most unique development activities in the world.

The supply side has been well seeded. It's an unprecedented gamble on luxury development. Everything necessary to generate the required demand seems on track too.

It will take at least four to five years for everything to blossom and for observers to determine just how well synchronized the strategic plan really was.

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