Economic slowdown fuels rise in travel deals

Hotels in Dubai have a reputation for offering some of the most lavishly expensive accommodations in the world.

The average price for a hotel room in the emirate was $300 a night in 2008, comparable to those in New York, London, and Paris, according to a recent report by Deloitte.

However, hotels in Dubai have not been immune to the economic slump that the hospitality industry has witnessed in other parts of the world.

Fall in room revenue

According to a report by tourism industry research firm STR Global, revenue per available room (REVpar) in the emirate fell to $200 in March, well below the $348 for the same month in 2008, as hotels dropped rates to attract guests.

The good news for travellers is that hotels that were formerly out of their price range might now be available at a rate they can afford. And while travellers are still being cautious about spending their money, they are increasingly looking to take advantage of opportunities to stay at luxury properties.

'There has definitely been a trade up,' says Tim White, product development manager at Emirates Holidays. 'People don't want cheap. What they are looking for is value for money.'

Over the past four months there have been significant savings for customers, he says, and new offers are 'coming in all of the time'. Recent deals at the upscale Desert Palm resort in Dubai and Atlantis on the Palm Jumeirah were very popular, White said, and a two-for-one special at the ultra-luxury Six Senses Zighy Bay resort in Oman - valid until September 20 - is currently generating a lot of interest.

A large percentage of the customers who are taking advantage of these deals are from the Gulf, a clear sign that travellers in the Middle East are showing a preference for travel close to home during the economic downturn, he said. There are also a lot of people who live in and around Dubai who are looking to stay at a luxury property in the emirate as a way to get a night of relaxation.

Discount hotel rooms

Discounts on room rates were inevitable in this economic climate, says Elie Armaly, the business development director of Roya International, a Dubai-based hospitality consultancy.

'Everybody is negotiating deals with hotels, be it airlines or corporate clients, so they have to do what they have to do to be competitive,' he said.

An increase in supply is also impacting the cost of hotel stays in Dubai, which saw the number of hotel rooms in the emirate increase by 17.9% to 50,457 last year, according to the Dubai Department of Tourism and Marketing. And with summer approaching and Ramadan falling immediately afterward on the calendar, now is a great time to seek out great offers, he said.

One clear sign that times have changed in customers' favour is that they often can negotiate with hotels to get better prices. 'Hotels are now more flexible on their walk-in rate. Previously it used to be: this is the rack rate, take it or leave it,' Armaly said.

Travellers also have the luxury of waiting until the last minute, as few people are booking in advance.

While great deals appear to be available in abundance, Armaly warns that the good times won't last forever. 'Competition is healthy, but at the end of the day hotels have to make a profit and answer to their owners, and there is going to come a time when they need to spend money on refurbishments, so there is a threshold for how low they can go in terms of rates. This is something they have to start thinking about that very carefully,' he said.