Dubai stays on record pace in quest to reach 2020 tourism goals

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Dubai continues to build hotels with the goal of doubling tourism between 2012 and 2020.
Dubai continues to build hotels with the goal of doubling tourism between 2012 and 2020.

Two years after becoming the first Middle Eastern city awarded a World Expo in the event's more than 160-year history, and four and a half years away from hosting the event, Dubai finds itself at a crossroad when it comes to tourism.

The emirate can offer visitors either the ultimate in modern urban opulence or a combination of dune-bashing and bedouin camp visits out in the desert. Dubai can serve as either a destination city or a stopover for Western visitors headed to Asia. And it can be viewed as either a financial center amid a region of geopolitical unrest or a shelter from it.

All of those contradictions aside, what is clear is that Dubai continues to attract record tourism numbers every year, and it may reach its goal of doubling those figures between 2012 and 2020.

Last year, the emirate boosted its overnight visitors by 7.5% from 2014, to 14.2 million. While visits from the U.S. rose just 3%, U.K. visits were up 11%, to 1.2 million, and India's visitor numbers surged 26% from a year earlier, to 1.6 million, making it the largest single-country source market for Dubai.

Such increases more than offset the impact of a 23% drop in travelers from Russia and Eastern Europe.

Dubai Airport last year vaulted from being the world's sixth-busiest to No. 3, with passenger traffic increasing 11%, to 78 million. The number of flights either taking off from or landing at Dubai Airport rose 14% last year, to more than 403,000, according to Dubai Airports.

"Most [Americans] say they want to go there en route to South Africa, India or the Maldives," said Rob Clabbers, the president of Chicago-based Q Cruise + Travel.

"The great thing is that airlines from the Middle East have increased airlift so much that they've made it convenient to stop over for two or three days."

In addition to being awarded the 2020 World Expo, Dubai has benefited from its position as a safe haven of sorts in the Middle East when it comes to geopolitical and security threats in the region.

HVS, a hospitality consultant and appraisal firm, wrote in its Middle East Hotel Survey published in June, "Notwithstanding, Dubai is largely sheltered from the impact of the regional turmoil; contrarily, it is benefitting therefrom. Following the unrest in neighboring countries, a significant portion of leisure travelers opted to travel to Dubai instead."

With that in mind, Dubai's tourism bureau made the decision to try to double its annual visitors by 2020, to 20 million.

To help achieve that, the government waived the 10% occupancy tax on new three- and four-star hotels "for a period of time after opening" and cut approval-process time for new lodging developments, all for the purpose of doubling hotel-room inventory during an eight-year span starting in 2012 to about 160,000 rooms.

How such numbers have benefitted the local hotel industry is murkier.

The 237-room Four Seasons Resort Dubai at Jumeirah Beach, the first under the luxury hotelier, opened in late 2014, while Dubai's second Four Seasons is slated to debut next week.

Last fall, the emirate's first hotel under Starwood Hotels & Resorts' St. Regis luxury brand debuted, complete with a shuttle services for guests via a fleet of Bentleys.

And Dubai's first hotel under Starwood's Aloft select-service brand was slated to open last week.

In fact, Dubai added 11 hotels totaling 2,800 rooms last year, and another 31 hotels totaling 9,300 rooms in 2016 would bring its inventory to 76,500, according to a Deloitte report published earlier this year.

The result of all this development is signs of a potential glut. While rooms rates toward the end of last year averaged more than $240 a night, revenue per available room was down almost 10% from a year earlier, while supply broadened 5.4%, according to STR Global.

Deloitte estimated that there are 54 hotels set to open up between 2016 and 2020, 22 of them in the luxury sector.

Still, Deloitte cites the World Expo and the prospect of a unified visa for the Golf Cooperation Council's six member states to drive tourism increases.

Clabbers said the number of clients from Europe requesting Dubai trips continues to rise.

"For people from the U.K., it's perfectly normal to say, 'I'm going to Dubai, and it's my key destination,'" Clabbers said. "They're looking to get out of the cold weather."

With that in mind, Dubai shows no signs of becoming more conservative when it comes to new visitor destinations.

Dubai Parks & Resorts earlier this month released details of a $2.8 billion theme park slated to open in October, with attractions such as a Lego-inspired waterpark and a theater that will look like the Taj Mahal.

Last fall a luxury lodging project called Rosemont Hotel and Residences was announced for 2018.

In addition to two towers totaling 450 rooms and 280 serviced apartments, the project, which will be part of Hilton Worldwide's Curio collection, will include a 2-acre area that will have a man-made beach and an indoor rain forest.

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