Dubai adds 2,500 hotel keys in H1 2019

The Dubai hospitality market is already plagued by oversupply resulting in a reduction in ADR’s of approximately 13% by the end of June 2019 and RevPar reductions of in excess of 18% over the same period. The outlook for the next 12 months is a continuing downward trend in both metrics but nevertheless, according to this recent Khaleej Times article, supply is to increase from approximately 92,000 keys now to 123,900 by Q4 2021 - an increase of almost 35%. To put this in perspective, London is forecast to have approximately 153,000 keys by that time.

Whilst EXPO 2020 will no doubt increase demand for a short period of time, adding to the existing oversupply will mean continuing downwards pressure on ADR's and Rev Par's. This will lead to operators cutting back to save costs and maintain profits and will arguably lead to lower levels of service which some commentators suggest is already happening.

Conversely, the Insider publication recently posted that Dubai will move up the rankings of the most visited cities in the world and by 2025 will be 5th behind Hong Kong, Bangkok, Singapore and Macau attracting an estimated 26.78 million visitors per year. That increase in visitor number from 16.66 million in 2018 might just soak up the excess supply!