November 20, 2008 / 8:46 PM / 10 years ago

Dubai eyes palm extravaganza, despite financial woe

DUBAI (Reuters) - The world may be tightening its belt but mere money woes have failed to thwart the star-studded grand opening of Dubai’s Atlantis hotel on a palm-shaped island visible from space.

Atlantis, The Palm is seen in Dubai during light tests, ahead of the opening of the resort, November 20, 2008. The $1.5 billion mega resort with 1,539 rooms is the first resort to open on Dubai's Palm Jumeirah artificial island. REUTERS/Jumana El Heloueh

The launch of the $1.5 billion mega resort on Thursday will feature red carpet appearances by a who’s who of A-list stars from Oprah Winfrey to Charlize Theron, under a sky exploding with what promises to be the world’s largest fireworks display.

While even Dubai is feeling the pain of the global financial crisis, and prices of real estate on the much-vaunted Palm Jumeirah are plummeting, Australian diva Kylie Minogue will open the glitzy Gulf tourism hub’s ocean-themed hotel with her debut concert in the Middle East.

“It’s not the perfect timing to open a $1.5 billion resort. On the other hand, we don’t build something like this with the short-term in mind,” said gaming and resort magnate Sol Kerzner, chairman and chief executive officer of Kerzner International.

“I believe Dubai will come to be one of the top destinations in the world.”

Dubai, part of the United Arab Emirates, the world’s fifth largest oil-exporter, kicked off a regional real estate boom when it opened the sector to private investment in 2002.

Boasting year-round sunshine and sandy beaches, Dubai, home to developments from the sail-shaped Burj al-Arab to the world’s tallest tower, has attracted a growing number of tourists.

Atlantis Dubai, a pink maze of arches that looms large on the city’s skyline, includes an aquarium boasting 65,000 sea creatures including sharks, eels and rays, a water park and a priceless sculpture made of 3,000 hand blown pieces of glass.

The hotel’s signature suite, which features floor to ceiling views of Dubai, costs $25,000 a night, well beyond the reach of ordinary holidaymakers.


But as the financial crisis begins to sap confidence in Dubai, prompting a stock market rout and a decline in property prices, even the well-heeled tourist may think twice next year.

“Tourism next year against the early part of this year will be more difficult,” said Kerzner, who made his name building South Africa’s Sun City and the Paradise Island resort in the Bahamas.

“I don’t think there’s any place that will be totally unaffected. Dubai, because it’s well-connected to so many different markets, it’s probably better placed than most other destinations,” he told Reuters.

“Whilst we will feel the effects (of the global financial crisis) here, we will continue to operate very profitably and experience very reasonable occupancies.”

Slideshow (10 Images)

Kerzner said occupancy rates at the hotel have been at around 77 to 78 percent since it opened its doors on Sept 24, but internal documents obtained by Reuters forecast occupancy rates from around 19 to 80 percent between Nov 19 until Nov 25, peaking when the star guests arrive for the gala launch.

Kerzner told Reuters before the opening in September that his Bahamas-based company was looking to boost earnings from the Middle East and Asia and would hold back development plans in Las Vegas with MGM Mirage and Dubai World investment unit Istithmar amid worsening U.S. economic conditions.

He said at the time that the group also plans to expand the Dubai Atlantis resort with an estimated $1 billion investment to bring in its exclusive The Cove brand. A penthouse at The Cove in the Bahamas would cost $15,000 a night.

Additional reporting by Jason Benham and John Irish; Editing by Lin Noueihed and Jon Boyle

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