Dubai hotels affected by Airbnb.com

Dubai hotels affected by Airbnb.com
In April this year, Dubai Tourism signed an agreement with Airbnb to allow homeowners to apply for licences without having to commission a third party as a management operator
Published: 10 October 2016 - 4 a.m.
By: ArabianBusiness.com staff

Prices in Dubai’s hotel market are being hit by more than 4,200 active short-term lets available in the city on Airbnb.com, according to new research.

Property consultancy Knight Frank said that the website, which enables consumers to rent homes for prices that are generally cheaper than a hotel, was hurting the local hospitality industry, specifically operators with more affordable rooms, or with fewer facilities.

The research said that while hotel operators had previously been dismissive of competition in the form of short-term letting websites, many were now recognising the ‘Airbnb effect’ and in some markets had lobbied aggressively against it.

“From a supply perspective, hotels in Dubai are insulated to some degree from the effects of the holiday home market as supply is largely ‘top heavy’ and internationally branded,” the research stated.

“Where potential weaknesses lie are in the ability of hotels to price during peak periods - this will become an issue in submarkets such as the Palm and Dubai Marina, which not only have volatile demand patterns but also high volumes of holiday home supply.”

In January this year, the former president and CEO of Jumeirah Group Gerald Lawless said: “I don’t see Airbnb as a threat so much as a new dimension to our industry. It is something that we have to make sure within the hotel business, we know how to embrace.”

In April this year, Dubai Tourism signed an agreement with Airbnb to allow homeowners to apply for licences without having to commission a third party as a management operator.

Of the 4,200 listings in Dubai, one-bedroom apartments account for 44 percent of total supply.

“Holiday homes in the emirate are largely located on Palm Jumeirah, Dubai Marina, Jumeirah Beach Residences (JBR), Dubai International Financial Centre (DIFC) and Downtown Dubai all areas that have high concentrations of hotel supply, which may prove to be problematic for the emirate’s hospitality sector in the long-run,” Knight Frank associate partner Ali Manzoor said in a statement.

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