Dubai hospitality market to remain tough in 2019, says Emerald Palace Kempinski MD

The hospitality market in Dubai will continue to experience tough conditions next year, according to Sebastien Mariette, managing director of Emerald Palace Kempinski and its sister property Kempinski Hotel and Residences Palm Jumeirah.

The 100,000 sq m property, which is set to open this week, pays homage to the palaces of 18th century Europe, boasts room rates starting at $760 (AED2,800) a night.

Speaking to Arabian Business, Mariette said he predicts a challenging year ahead, but said the new Kempinski will offer the right experiences to draw customers in.

“Many people tell me that this is a tough period to open a hotel in Dubai, but I think this is a cycle. Yes, it is a bit challenging. 2018 was not an easy year and I don’t think 2019 will be much easier, but if we are consistent when it comes to quality and value for money, we will get there. It might take 6-8 months, but if we offer the right experiences, we will get there, because we have the product,” he said.

Hotel room rates in Dubai hit a 14-year low during July 2018 due to an increase in supply, according to STR Data, with average daily rates falling 9.7 percent to AED423.

Mariette said earlier that the $700m Emerald Palace Kempinski will sit below the average 80 percent occupancy in Dubai at 50-60 percent due to its high pricing strategy.

“We expect occupancy in the first year to be between 50-60 percent, which is below the market level. Dubai is running on more than 80 percent and above on average, but if we want to be consistent with our pricing strategy, we have to give up a little on occupancy,” he said.

The MD predicted a boost to the Dubai hotel market during Expo 2020 and, while he warned of a possible slowdown following the event, said he is confident in a market rebound.

“We’ve very excited about Expo 2020 and it will definitely give boost to market. There might be a drop afterward but as an hotelier, I’m confident in the power of Dubai as a destination to create something new in order to rebound after Expo 2020. If we are consistent with quality, keep assets in a very good condition, we’ll be okay,” he said.

“I was in other countries where I realised that local authorities have no clue about what they are doing to boost their destination, and this is not the case in Dubai…so we might go through a good or bad period, but we have to be consistent,” he said.

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