By Rebecca Bundhun

Dubai’s Palm Jumeirah has two new luxury hotels with more to follow, just as strong signs of recovery in tourism begin to appear.

Island living: the One&Only hotel that opened at the Palm has 90 rooms and four villas with an average room rate of Dh3,500 a night. Nicolas Dumont
Island living: the One&Only hotel that opened at the Palm has 90 rooms and four villas with an average room rate of Dh3,500 a night. Nicolas Dumont

A US$150 million (Dh50.9m) One&Only hotel, with room rates starting at an average Dh3,500 a night, opened on the palm-shaped cluster of man-made islands in November. This month, the Zabeel Saray hotel, managed by Jumeirah, opened its doors.

“Before, The Palm was only really the Atlantis,” said Olivier Louis, the managing director at One&Only The Palm and One&Only Royal Miragein Dubai. “It’s nice to see some of the hotels are opening. It’s starting to animate the whole island.”

Thirty five-star hotels with a total of 14,000 rooms were planned for the island cluster.

But these properties were delayed or cancelled as financing conditions deteriorated. In the master plan for the island, the Trump International Tower and Hotel was supposed to have been the centrepiece of The Palm, but it has been on hold since late 2008.

The 1,539-room Atlantis did open in 2008, but until recently there have been no other hotels operating on The Palm.

The Royal Amwaj resort, due to be managed by Moevenpick, is expected to open at the end of the summer. A Kempinski hotel and residences building is also well on the way to completion.

The management company Kerzner, which owns the Atlantis and One&Only brands, is the biggest player in the area, with 2,100 rooms across its three hotels in Dubai. Dubai World has a stake in Kerzner, as well as being a joint partner in the Atlantis development.

“We are our own competitor,” Mr Louis said. “A third of our guests staying here now are past One&Only Royal Mirage guests.”

The new One&Only property, which has 90 rooms and four villas, was sold out for the festive season at the end of last year and has been profitable in its first weeks of operations, he said.

In terms of beach resorts, he said Dubai was still relatively under-supplied.

Revenues at beach resorts in the emirate grew by 15 per cent in the last quarter of last year compared with the same period in 2009, Mr Louis said. He said the slight strengthening of the US dollar may have been a factor.

“The leisure industry is starting to rebound,” he said, adding that the business travel sector was also picking up. But there are difficulties ahead, he cautioned.

“The summer still looks challenging. Remember, we have Abu Dhabi that has much more [capacity now]. We have Qatar and Oman. We have quite a few more players within the vicinity. Also, we are competing with other destinations which have suffered greatly, such as Thailand … which is giving amazing offers.”

Another possible problem, analysts say, is that some potential visitors to The Palm might be put off by the construction taking place on the crescent-shaped breakwater and by the many half-finished developments that dot the area.

“The fact that there are some projects that are on hold or on which the construction is moving very slowly could be a handicap for the other hotels,” said Chiheb ben Mahmoud, the senior vice president at Jones Lang LaSalle Hotels for the Middle East and Africa.

“The whole destination does not stand out as something that is established and working.”

He said the positioning of the two new properties was a mixed blessing.

“The good thing is, perhaps, that the Jumeirah Zabeel Saray and the One&Only are at the end of the Crescent, so to some extent they are shielded from any disruption,” said Mr Mahmoud.

“[But] they are far, so they are isolated. Guests will have to have special solutions to move around. The hotels will need to be creative in order to overcome the fact that the Crescent is a work in progress.”

Mr Louis said the relatively small One&Only on The Palm was attractive to many guests because it was not overlooked by many other finished properties.

Most of the nearby planned developments have not yet been completed.