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Global Recovery, We Have A Problem: Dubai Hotel Occupancy Plunges To 18-Year Lows

Tyler Durden's picture




 

Despite Dubai's recent explosion of speculative fervor (stocks and real estate), and the world's leaders demanding we believe that global recovery is accelerating, there is yet another awkward anecdotal data point that suggests things are are far from 'normal'. As Bloomberg reports, Dubai’s hotels had the lowest occupancy in at least 18 years in July, standing more than half empty, as more rooms were created and demand declined, according to research firm STR Global.

The Dubai bubble burst but BTFD'ers are back...

 

But as Bloomberg reports, it's not helping tourism...

Dubai’s hotels had the lowest occupancy in at least 18 years in July, standing more than half empty, as more rooms were created and demand declined, according to research firm STR Global.

 

Occupancy declined 11.8 percentage points to 45.4 percent from a year earlier, STR Global said in a report dated yesterday. That’s the lowest since the company began tracking the Dubai hospitality market.

 

Dubai, which built some of the world’s most recognizable hotels such as the sail-shaped Burj al Arab, plans to almost double the number of hotel rooms by 2020 as it expects a surge of visitors ahead of the World Expo that year. The emirate is targeting about 160,000 rooms, many of them in the three- and four-star category rather than the luxury segment, Helal Saeed Almarri, director general of the Dubai Tourism and Commerce Marketing, said in March.

 

“As July is one of the hottest months within the region and coincides with the fasting month of Ramadan, the city had an overall negative trend, on top of growing supply,” Elizabeth Winkle, managing director of STR Global, said in the report.

 

Revenue per available room, an industry measure of occupancy and rates, fell 7.4 percent to 290.23 dirhams ($79) according to STR Global, which advises hotel operators, developers and banks on the hospitality industry.

*  *  *

Of course - a 12% YoY plunge to near-record lows is likely brushed off as transitory...

 

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Tue, 08/12/2014 - 15:19 | 5083161 Itchy and Scratchy
Itchy and Scratchy's picture

The September ISIS Recruitment Convention should help fill some of that space!

Tue, 08/12/2014 - 15:36 | 5083267 NoDebt
NoDebt's picture

I read this article and keep having the same joke run through my head...

My dog has no nose.

How does he smell?

The punchline being, of course, "Like Dubai's hotel occupany numbers."

Tue, 08/12/2014 - 15:37 | 5083278 negative rates
negative rates's picture

How is that our problem?

Tue, 08/12/2014 - 15:38 | 5083282 Itchy and Scratchy
Itchy and Scratchy's picture

My fav is the guy who looks down at a dog that is licking its genitals and says to his buddy,  'I wish I could do that.'

He buddy said, ' I think you should pet him first to see if he's friendly.' 

Tue, 08/12/2014 - 15:18 | 5083163 firstdivision
firstdivision's picture

I have yet to figure out the appeal of going to a really hot fucking desert where everyone hates you.

Tue, 08/12/2014 - 15:22 | 5083188 Cannon Fodder
Cannon Fodder's picture

Compared to other places where a lot of people are working (like Iraq and Afghanistan, Dubai looks pretty good.... resorts, hotels, alcohol, and lots of Russian and Asian women (if you know what I mean).....

Wed, 08/13/2014 - 04:30 | 5086114 BrosephStiglitz
BrosephStiglitz's picture

Dubai = Disney World.  It's a make-believe, fairytale "utopia" that is held together by a thread.  There could be an asteroid of biblical proportions heading to the planet earth, and everyone else would be throwing their savings into air-raid bunkers and air purifiers and those dipshits would STILL be building hotels.

In 100 years time, Dubai is going to be a half-buried reminder of peak human stupidity.  With very little potable water (and an increasingly saline ocean on their coast), poor sanitation networks due to rapid urbanization/poor city planning, less than a few weeks of food, no energy resources to speak of and a shit ton of hotels/beach houses/skyscrapers to maintain, that city is going to be a ruin that the desert is going to swallow.

Tue, 08/12/2014 - 15:27 | 5083223 LawsofPhysics
LawsofPhysics's picture

I try to avoid Phenix myself.

Tue, 08/12/2014 - 16:15 | 5083505 JuliaS
JuliaS's picture

The only kind of visitors who go there are running away from people who hate them even more.

Tue, 08/12/2014 - 20:36 | 5084886 ElvisDog
ElvisDog's picture

Seriously, a 9-hour plane flight to set on some artificially-cooled beach or ski on some bullshit dome ski slope? Anything they offer there in terms of food, drinks, hookers, or shopping you can get anywhere else on Earth.

Tue, 08/12/2014 - 15:18 | 5083164 Bloppy
Bloppy's picture

Sorry, economic meltdowns are irrelevant.

Celeb obits are the only priority:

http://tinyurl.com/lss4x8h


Tue, 08/12/2014 - 15:19 | 5083168 pods
pods's picture

Tiger stopped bringing his entourage of Applebee's hostesses to the golf tournament?

pods

Tue, 08/12/2014 - 15:26 | 5083219 LawsofPhysics
LawsofPhysics's picture

Yes, and honestly, his game has gone to shit ever since.

Tue, 08/12/2014 - 15:29 | 5083229 pods
pods's picture

You would think his lower back would have given out before, not after?

Maybe that was a form of stretching?

As an aside, I have always hated his swing.  Sure it got the job done, but it was painful to watch.  

Now, Ernie Eels, that is a golf swing.

pods

Tue, 08/12/2014 - 16:29 | 5083628 Citxmech
Tue, 08/12/2014 - 15:20 | 5083169 NOTaREALmerican
NOTaREALmerican's picture

That's because everybody is booking houses in Alsace and Provence!   

Tue, 08/12/2014 - 15:22 | 5083176 Dr. Engali
Dr. Engali's picture

Clearly they need to build moar islands.

Tue, 08/12/2014 - 15:21 | 5083183 Cannon Fodder
Cannon Fodder's picture

Dubai Hotel occupancy is a bad metric for over all economic activity. A very large portion of the hotel occupancy is based upon US military and contractor presence in Iraq and Afghanistan. As the amount of US involvement in Iraq and Afghanistan dwindles, so does the number of contractors. Dubai is the staging point. Contractors fly through and spend a night or two. So without contractors, no hotels.

Tue, 08/12/2014 - 15:38 | 5083273 KidHorn
KidHorn's picture

OK, but it's at a 18 year low. I think there's more to it than that.

Tue, 08/12/2014 - 15:39 | 5083289 NoDebt
NoDebt's picture

I've never found a faster way to lose money in the markets than to use straight-forward, clear-eyed, easily understood logic like that.

Tue, 08/12/2014 - 18:45 | 5084404 max2205
max2205's picture

Fucking Muslim hotels just don't get me hard

Tue, 08/12/2014 - 16:32 | 5083667 Cannon Fodder
Cannon Fodder's picture

Sure, I agree that there is probably more, just saying that a large part of it, in my opinion, is from US military involvement in the area.

Wed, 08/13/2014 - 04:35 | 5086118 BrosephStiglitz
BrosephStiglitz's picture

Probably the fact that they own a city full of hotels and shopping malls (with no plans to cease building in sight.)  Apparently issues of scarcity and supply/demand do not apply to Dubai.

Tue, 08/12/2014 - 15:23 | 5083198 thethirdcoast
thethirdcoast's picture

Couldn't have happened to a nicer bunch seeing as they like to plow their profits into extremist causes around the globe.

Tue, 08/12/2014 - 15:25 | 5083216 shouldvekilledthem
shouldvekilledthem's picture

I had the "pleasure" of visiting Dubai for a short period of 2 weeks. If any of you want to experience what does it mean to have no values other than greed and what kind of society does it produce then I highly recommend a visit.

Tue, 08/12/2014 - 15:38 | 5083279 NOTaREALmerican
NOTaREALmerican's picture

Isn't greed good?  

Tue, 08/12/2014 - 16:13 | 5083502 PontifexMaximus
PontifexMaximus's picture

Ur fault, u stayed 10 days too long!

Tue, 08/12/2014 - 15:31 | 5083249 ghostzapper
ghostzapper's picture

BTFEMPTYROOMS

Tue, 08/12/2014 - 15:32 | 5083251 gdiamond22
gdiamond22's picture

Not transitory, it is 'noise'.

Tue, 08/12/2014 - 15:36 | 5083268 Itchy and Scratchy
Itchy and Scratchy's picture

Looks like a good TRIVAGO story to me!

Tue, 08/12/2014 - 15:36 | 5083270 nosoeawe
nosoeawe's picture

it's the weather stupid

Tue, 08/12/2014 - 15:38 | 5083281 Make_Mine_A_Double
Make_Mine_A_Double's picture

EEEEEEEEEeeeeeBBBBBbbbbOOOOOOOooooLLLLLLLllllAAAAAAAAAaaaaaaaaa

If it gets out of the box - even if just as public persception it will total hotel, hospitality and airline stocks.

 

Tue, 08/12/2014 - 15:46 | 5083315 ZeroPoint
ZeroPoint's picture

What exactly does one do in Dubai? There are plenty of beaches in other countries that don't live under theocracy.

 

Tue, 08/12/2014 - 16:05 | 5083406 NOTaREALmerican
NOTaREALmerican's picture

What do people do on cruises?  Eat, drink, gamble, shop, sit in the sun and bake.  If people can figure out something to do in Las Vegas they should be able to find the same thing in Dubai.   Most of the Indians that work for my TBTF Zombia take a trip to Dubai every 2nd or 3rd time they go home to visit.

Tue, 08/12/2014 - 20:38 | 5084896 ElvisDog
ElvisDog's picture

The Indians go to Dubai to have sex with attractive women, not like the ones waiting for them in Bangalore....

Tue, 08/12/2014 - 16:33 | 5083676 Cannon Fodder
Cannon Fodder's picture

A lot of Saudis will also go vacation there as they can do more there than at home.

Tue, 08/12/2014 - 16:42 | 5083732 Canucklehead
Canucklehead's picture

They can draw pictures in the sand and watch the ocean waves erase them.  In Saudi Arabia, those same pictures require a hot wind to erase them.

Tue, 08/12/2014 - 15:48 | 5083333 22winmag
22winmag's picture

Dubai? Nuke it for the insurance money.

Tue, 08/12/2014 - 15:50 | 5083338 smacker
smacker's picture

Decent quality hotel room costs in Dubai are too high, even if you exclude luxury places like Burj al Arab. Taxi fares are too expensive. Boozing is mostly confined to hotels for western guests, although I knew one or two discreet places elsewhere. Apart from the quality architecture there's not a lot to see/do unless you like the beach and shopping.

Tue, 08/12/2014 - 17:54 | 5084190 Monty Burns
Monty Burns's picture

...and Russian whores.

Tue, 08/12/2014 - 15:51 | 5083354 Jack Sheet
Jack Sheet's picture

I thought Dirham was the 56th wife of Omar Khayaam.

Tue, 08/12/2014 - 15:53 | 5083375 GFORCE
GFORCE's picture

Capital is fleeing to Dubai as a safe haven. That's why stocks are up.

Tue, 08/12/2014 - 16:50 | 5083780 goldhedge
goldhedge's picture

Who the fuck wants to go and fund the Islamofacist?

Let them eat sand.

Tue, 08/12/2014 - 16:58 | 5083854 Dead Man Walking
Dead Man Walking's picture

I believe the DOOM reports

tired of reading nothing but DOOM

Tue, 08/12/2014 - 17:29 | 5084030 dizzyfingers
dizzyfingers's picture

"Stanley Fischer warns lower productivity growth and labour force participation rates are now permanent features of the economy."

“Disappointing” economic recoveries may point to a permanent downshift in the potential of powerhouses such as the US, Europe and China, the vice-chairman of the US Federal Reserve has warned."

“We are beginning to discover that the reason the world recovery is so slow is that monetary policy isn’t the answer now." 

 http://investmentwatchblog.com/economic-crisis-of-mass-unemployment-and-poverty/#kkUVZtEHYtg52pXZ.99

Slow learners.

Wed, 08/13/2014 - 06:47 | 5086234 Ides of November
Ides of November's picture

Monetary policy isn't the answer!!

Haha, who this is ignoramus. The Deputy Chairman of the Federal Reserve!!!

Oh dear, we really all are stuffed.

Tue, 08/12/2014 - 17:36 | 5084100 foodstampbarry
foodstampbarry's picture

So where are all the billionaires taking their high priced hookers now?

Tue, 08/12/2014 - 20:11 | 5084768 Bunga Bunga
Bunga Bunga's picture

Calm down, it's just too many hotels like too many ships. Nothing to see here.

Wed, 08/13/2014 - 06:48 | 5086237 Ides of November
Ides of November's picture

So what happens when the shooting starts in World War 3 (potentially just weeks or months away), and Iran lobs some missiles into some of these decadent towers in Dubai, Abu Dhabi, Doha etc?

Can anyone predict what happens to hotel vacancy rates in Dubai when the shooting starts?

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