Expansion of the Hospitality Industry- Delays and Cancellations in Building Hotels

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This series started optimistic that the hospitality industry will not be affected as much by the economic crunch. Apparently, nothing is immune to the growing and looming depression. Not even the technology world or the videogame world is spared from massive layoffs and inevitable restructuring. Along the journey into this series, we discovered that the hospitality industry is facing its own problems due to the downturn.

It is true that tourism has risen in some parts of the world. It is uncertain if this is sustainable in the long run. We have a lot of variables to consider like terrorism and natural disasters that can surely hamper any booming business.

Just the last year, Palm developer Nakheel started delaying their flagship projects in Dubai. Major cash problems hound them as they needed to lay off 500 employees they considered redundant. Because of the economic recession, the big UAE developer had to delay their $80 billion projects, including the much touted Trump International Hotel and Tower, Gateway Tower, and the Waterfront.

Lofty goals in Dubai are being shot down one by one almost due to the economic downturn more than anything. Even the mighty man-made islands are being delayed and pulled out of priority. Unfortunately, Nakheel is not the only Real Estate developer that is laying people off. Companies like Damac Holding, Omniyat and Tameer Holding Investment also announced some layoffs last year. It is without certainty if the layoffs will halt this year.

It was not long ago that China, Russia, and Dubai have been flying high with all of the massive infrastructures and building projects in the planning and staging level. Because of all the financial uncertainty, a lot of these projects are going to be shelved or delayed. There is a major Jumierah Shanghai hotel construction that will be delayed until the end of the year. The reason? Economic meltdown. The tourism in China dropped like a cannon ball to 5.9% from last year.

Even oil producing countries like Kuwait is in dire straits. The newest Tamdeen Mall that should cost $350 million will have to seize construction. The local Tamdeen Shopping Centre Development Company claims that they are delaying the project because they need “regulatory approval” of the mall’s design.

It seems like the death scythe of the depression is not sparing anyone or anything. As oil prices are going down, these delays are not surprising at all. Even the prosperous area of Riyadh will have to delay 2008 projects to this year. Although, Riyadh is still economically strong more than ever.

With the tourism hanging in the balance of natural disasters and terrorism, plus the construction delays and cancellations of major projects are on the horizon, it is the uncertainty that looms over the economy casting a shadow at every turn. With every depression and uncertainty the wise will always look and scavenge for opportunity. Surely after the depression, if survived by the wise, monolithic projects will rise again.

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