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Thursday, July 7, 2022

Dubai Hotels May Cut 30% of Jobs Until Demand Recovers: STR

About 30% of jobs in Dubai’s hotel industry is likely to be lost over the summer until demand recovers from the pandemic, according to research firm STR.

More than a third of the city’s 120,000 hotel rooms will probably remain closed through the typically slow summer months as most owners channel reservations into fewer properties to save on operating costs, Philip Wooller, Middle East and Africa director at STR Global, said in an interview. The industry employs about 40,000 people, he estimated.

The job-loss estimate is a “minimum,” Wooller said. “Otherwise you’re asking the owners to reach into their own pockets and, while some might do that, others won’t be able to afford it.”

From the Roman columns of the Palazzo Versace to the Ottoman domes of Zabeel Saray, Dubai has built a collection of monuments to attract tourists. Almost 17 million tourists visited the city last year, contributing about 12% to economic output.

Hotel occupancy slumped to 23% since the pandemic hit from about 80%, among the highest in the world. Average occupancy globally is around 20% and has been mostly held up by demand for accommodation for medical staff and quarantines.

“Dubai’s Hospitality businesses are resuming operations based on issued government reopening guidelines during this pandemic,” the emirate’s media office said in a tweet. “Dubai’s hotel sector is healthy and this prudent approach prepares the industry for an even stronger resurgence post Covid.”

Occupancy is expected to recover to between 50% and 60% by September as demand improves and hotels reopen, Wooller said. Some operators, especially beach hotels, may see demand from residents unable to travel abroad seeking local vacations instead.

“If people are feeling a bit safer and have some money to spend, there will be opportunities for staycation offers, and we’re already seeing some of those,” Wooller said. “The industry will come back stronger than before.”

Closures have hit most hotels in the rest of the Gulf, with nearly 43% of rooms in the Omani capital being shuttered. In Mecca, more than 80% of rooms were closed as the city that hosts Islam’s holiest site, suffered the worst outbreak in Saudi Arabia.

Some hotel owners in Qatar are benefiting from the government leasing nearly 30 properties. Qatar, which is set to host the soccer World Cup in 2022, is still benefiting from demand as infrastructure preparation continues. In Abu Dhabi, just 17% of the city’s 29,000 rooms closed. Occupancy is hovering around 50% as the government leases rooms for essential staff and for quarantines, according to STR Global.

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