Learning lessons from the Middle East

Learning lessons from the Middle East

I just returned from a visit to several key Middle East hotel markets and was struck by how much the mood varies from place to place.


Although folks in Dubai are keeping a brave face, the mood was subdued, if not glum, as expected.  The economic explosion/implosion in Dubai is well known and has been well documented, but I still was not prepared for the contrast of grand hotels sitting near large groups of brand new buildings, all put up at once, in many cases standing largely empty. Build it and they will come seemed to be the prevailing mindset. Don?t get me wrong, some hotels were doing just fine, but with the current climate, not enough people are coming to Dubai?and those that are, aren?t spending what they were before.


Abu Dhabi and Muscat didn?t have the frenzy of development that Dubai had, and those markets seem more calm and stable.


By contrast, there is a remarkable amount of enthusiasm in Doha. Everywhere there are signs promoting Qatar?s bid to host the 2022 World Cup Tournament. Doha is brimming with optimism about the opportunity that the World Cup could bring.  But Qatar has lessons to learn both from its Gulf neighbor and South Africa, the last host of the World Cup.


Many people confided to me that Dubai is, for the foreseeable future, in serious trouble, a victim of growth for growth?s sake during a boom period, without regard for actual demand or the ability of the existing, crippled, market to absorb the new product. 


South Africa is experiencing its own post-rapid growth hangover. There, the throng came, as expected, filling up all the new hotels that were built at break neck pace in the run up to the World Cup. But now, with Spain having been crowned champion, everyone has gone home. That market is plagued with excess capacity, particularly in the upper segments, and the less well-conceived projects are starting to show their weaknesses. Unlike Dubai, which built without regard for whether there was actual demand in the near term for all that was being built, South Africa met the needs of the present, with less concern for whether (or with blind optimism that) demand would be sustained after the vuvuzelas fell (mercifully) silent. They both represent a cautionary tale that each hot new city seems to need to learn for itself.


However, the Qataris I spoke with were all too aware of the challenges that Dubai is now facing and, with the benefit of 20/20 hindsight, are very keen on avoiding the same fate. I?m betting that they will pursue a more deliberate course. What do you think?