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Dubai hotel apartments expect flat occupancy rates in 2009 because of decline in tourism

According to the Department of Tourism and Commerce Marketing, the occupancy rate for hotel-apartments was just over 82% in 2007, up slightly from 80% in 2006.

In comparison, the hotel room occupancy rate in 2007 was marginally higher, at 84%. In 2007, 125 hotel-apartment properties were registered with the Department of Tourism, compared to 111 in 2006.

'Hotel apartments did very well because of a shortage of hotel rooms in Dubai,' said Peter Janssen, group general manager at StarHospitality, a division of ETA group.

However, occupancy rates for 2008, especially the second half of the year, have shown a decrease, as the impact of the global economic downturn begins to affect the lucrative leisure industry.

Chelsea Hotels, which opened its new Chelsea Gardens project in the Discovery Gardens area of Dubai this week, said that despite the current market conditions it believes in the long-term growth prospects of the local hotel industry.

'We stand committed to supporting the vision of the government in promoting Dubai as a world leader in tourism and hospitality,' said Karim Kassam, executive director for the Chelsea Hotel Group.

'We got involved in these projects at the end of 2007. At that time no one was to know what would be happening in the markets today. I agree it's probably not the right time to be opening but the market's not run dry completely,' he explained.

'The downturn we are seeing here was inevitable. But I'm sure the people that are committed to delivering what they were planning already will complete their projects. And it will give us a lot more realistic Dubai going forward, with more manageable projects, and it is a good thing for Dubai in the long run,' Kassam added.

The management team hopes to attract a core base of corporate clients, primarily working out of the Jebel Ali Free Zone as well as the Dubai Marina area.

For StarHospitality, a 102 bedroom hotel in Al Barsha is due to be completed and open in the next six months.

Janseen predicts that rates will rise again. 'This is a cyclical market, where we are now seeing a correction going on. By the last quarter of 2009 we should see a stabilisation, with occupancy rates being more flat in 2010 before a recovery,' he added.