Dec 10, 2009
Europe’s Volkswagen will buy 19.9 per cent stake in Indian carmaker Maruti’s Japanese parent Suzuki for about $2.5 billion, a move aimed at enhancing its presence in small car segment in Asia.
Maruti Suzuki accounts for over half the cars on Indian roads, giving Volkswagen the volumes it needs to topple Toyota as the world’s largest carmaker with an estimated sales of seven million units this year. In return, Suzuki would benefit from the European company’s expertise in hybrid cars. “The automobile industry is going through a fundamental shift. Alliances are at the top of the agenda and they are indispensable for competition,” Volkswagen CEO Martin Winterkorn was quoted by Bloomberg as having told reporters in Japan.
While Volkswagen would pay $2.5 billion (over Rs 11,500 crore) for the partnership that will focus on making cars for emerging markets, Suzuki would use half of this amount to buy Volkswagen shares.
Thursday, December 10, 2009
Sunday, December 6, 2009
MiG-29Ks for Gorshkov aircraft carrier reach India
New Delhi, Dec 5 (PTI) Ending a year-long wait, the first batch of MiG-29K naval fighter jets, purchased from Russia for the Admiral Gorshkov aircraft carrier, arrived in Goa last evening, three years ahead of the warship.
These MiG-29Ks are part of the 16 ordered for USD 526 million in 2004 along with Gorshkov, which is expected to be delivered to the Indian Navy only by 2012-end.
"The first batch of the MiG-29K fighters' parts have landed in INS Hansa, the naval air station in Goa, last evening," Navy spokesperson Commander P V S Satish said here today.
The aircraft parts, packed in containers in a knocked down condition, landed here by an AN-124 cargo aircraft, considered to be the biggest operational military aircraft of Russian-Ukrainian origin.
These MiG-29Ks are part of the 16 ordered for USD 526 million in 2004 along with Gorshkov, which is expected to be delivered to the Indian Navy only by 2012-end.
"The first batch of the MiG-29K fighters' parts have landed in INS Hansa, the naval air station in Goa, last evening," Navy spokesperson Commander P V S Satish said here today.
The aircraft parts, packed in containers in a knocked down condition, landed here by an AN-124 cargo aircraft, considered to be the biggest operational military aircraft of Russian-Ukrainian origin.
Major cities at risk from rising sea level threat
December 2009
The predicted rise in sea levels would engulf island nations such as the Maldives in the Indian Ocean and Tuvalu in the Pacific, devastate coastal cities such as Calcutta and Dhaka and force London, New York and Shanghai to spend billions on flood defences
Sea levels will rise by twice as much as previously predicted as a result of global warming, an important international study has concluded.
The Scientific Committee on Antarctic Research (SCAR) calculated that if temperatures continued to increase at the present rate, by 2100 the sea level would rise by up to 1.4 metres — twice that predicted two years ago.
Such a rise in sea levels would engulf island nations such as the Maldives in the Indian Ocean and Tuvalu in the Pacific, devastate coastal cities such as Calcutta and Dhaka and force London, New York and Shanghai to spend billions on flood defences.
Even if the average global temperature increases by only 2C — the target set for next week’s Copenhagen summit — sea levels could still rise by 50cm, double previous forecasts, according to the report.
SCAR, a partnership of 35 of the world’s leading climate research institutions, made the prediction in the report Antarctic Climate Change and Climate. It far exceeds the 0.59 metre rise by the end of the century quoted by the Intergovernmental Panel on Climate Change (IPCC) in 2007. This was based on a “business as usual” approach by governments that allowed temperatures to rise by 4 degrees. It will underpin the negotiations in Copenhagen.
SCAR scientists said that the IPCC underestimated grossly how much the melting of the Antarctic and Greenland ice sheets would contribute to total sea-level rises.
One of the world’s leading experts on climate science has called for the world to intensify efforts to control global warming by actively removing carbon dioxide from the atmosphere.
In an interview with The Times, Dr Rajendra Pachauri, chairman of the IPCC, said that geo-engineering, where carbon is stripped from the atmosphere using specialist technologies, would be necessary to control runaway damage to the climate. “At some point we will have to cross over and start sucking some of those gases out of the atmosphere.”
He added that world leaders meeting in Copenhagen should aim for a tighter target of no more than a 1.5C rise in global temperatures.
The IPCC report predicted that the melting of ice sheets would contribute about 20 per cent of the total rise in sea levels, with the majority coming from the melting of glaciers and the expansion of the water as it warms. It said that it was not able to predict the impact of melting ice sheets, but suggested this could add 10-20cm.
The SCAR report uses detailed climate observations over the past century linking temperature to sea levels to produce a more sophisticated estimate. It puts the likely contribution from ice sheets at more than 50 per cent.
The calculations were carried out by Stefan Rahmstorf, Professor of Physics of the Oceans at the Potsdam Institute for Climate Impact Research in Germany. Sceptics seized upon his figures as further evidence of the unreliability of climate change predictions.
“It’s 50cm, 60cm, 100cm — 60m if you ask James Hansen from Nasa,” said Benny Peiser, director of the Global Warming Policy Foundation . “The predictions come in thick and fast, but we take them all with a pinch of salt. We look out of the window and it’s very cold, it doesn’t seem to be warming. We’re very concerned that 100-year policies are being made on the basis of these predictions”
The predicted rise in sea levels would engulf island nations such as the Maldives in the Indian Ocean and Tuvalu in the Pacific, devastate coastal cities such as Calcutta and Dhaka and force London, New York and Shanghai to spend billions on flood defences
Sea levels will rise by twice as much as previously predicted as a result of global warming, an important international study has concluded.
The Scientific Committee on Antarctic Research (SCAR) calculated that if temperatures continued to increase at the present rate, by 2100 the sea level would rise by up to 1.4 metres — twice that predicted two years ago.
Such a rise in sea levels would engulf island nations such as the Maldives in the Indian Ocean and Tuvalu in the Pacific, devastate coastal cities such as Calcutta and Dhaka and force London, New York and Shanghai to spend billions on flood defences.
Even if the average global temperature increases by only 2C — the target set for next week’s Copenhagen summit — sea levels could still rise by 50cm, double previous forecasts, according to the report.
SCAR, a partnership of 35 of the world’s leading climate research institutions, made the prediction in the report Antarctic Climate Change and Climate. It far exceeds the 0.59 metre rise by the end of the century quoted by the Intergovernmental Panel on Climate Change (IPCC) in 2007. This was based on a “business as usual” approach by governments that allowed temperatures to rise by 4 degrees. It will underpin the negotiations in Copenhagen.
SCAR scientists said that the IPCC underestimated grossly how much the melting of the Antarctic and Greenland ice sheets would contribute to total sea-level rises.
One of the world’s leading experts on climate science has called for the world to intensify efforts to control global warming by actively removing carbon dioxide from the atmosphere.
In an interview with The Times, Dr Rajendra Pachauri, chairman of the IPCC, said that geo-engineering, where carbon is stripped from the atmosphere using specialist technologies, would be necessary to control runaway damage to the climate. “At some point we will have to cross over and start sucking some of those gases out of the atmosphere.”
He added that world leaders meeting in Copenhagen should aim for a tighter target of no more than a 1.5C rise in global temperatures.
The IPCC report predicted that the melting of ice sheets would contribute about 20 per cent of the total rise in sea levels, with the majority coming from the melting of glaciers and the expansion of the water as it warms. It said that it was not able to predict the impact of melting ice sheets, but suggested this could add 10-20cm.
The SCAR report uses detailed climate observations over the past century linking temperature to sea levels to produce a more sophisticated estimate. It puts the likely contribution from ice sheets at more than 50 per cent.
The calculations were carried out by Stefan Rahmstorf, Professor of Physics of the Oceans at the Potsdam Institute for Climate Impact Research in Germany. Sceptics seized upon his figures as further evidence of the unreliability of climate change predictions.
“It’s 50cm, 60cm, 100cm — 60m if you ask James Hansen from Nasa,” said Benny Peiser, director of the Global Warming Policy Foundation . “The predictions come in thick and fast, but we take them all with a pinch of salt. We look out of the window and it’s very cold, it doesn’t seem to be warming. We’re very concerned that 100-year policies are being made on the basis of these predictions”
Saturday, December 5, 2009
Cricket-India on top rankings
Sun Dec 6, 2009
India won the final test against Sri Lanka by an innings and 24 runs on Sunday to clinch the three-match series 2-0 and secure their place at the top of the test rankings for the first time.
Sri Lanka may have thwarted India through the fourth day, but Zaheer Khan sliced through the remaining four wickets to take India to a 2-0 series win and the No. 1 spot in the ICC rankings. Zaheer started with a ripper in the first over to get rid of Kumar Sangakkar and finished his best performance of the series with his eighth five-wicket haul. This was the third time in the last four years that India had won two matches in a row; two of those braces came against Sri Lanka.
In comparison with day four, the end came swift. Sangakkara was yet to get his eye in again when Zaheer bowled the perfect left-armer's outswinger that took the edge. After that it was all a matter of time: both Rangana Herath and Nuwan Kulasekara succumbed to sharp short deliveries from Zaheer. Muttiah Muralitharan scored a quick 14 but edged Harbhajan Singh to MS Dhoni to kick off India's celebrations.
India wrapped up the tail in 7.4 overs to seal a 2-0 series victory that saw them displace South Africa at the top of the test rankings.
India won the final test against Sri Lanka by an innings and 24 runs on Sunday to clinch the three-match series 2-0 and secure their place at the top of the test rankings for the first time.
Sri Lanka may have thwarted India through the fourth day, but Zaheer Khan sliced through the remaining four wickets to take India to a 2-0 series win and the No. 1 spot in the ICC rankings. Zaheer started with a ripper in the first over to get rid of Kumar Sangakkar and finished his best performance of the series with his eighth five-wicket haul. This was the third time in the last four years that India had won two matches in a row; two of those braces came against Sri Lanka.
In comparison with day four, the end came swift. Sangakkara was yet to get his eye in again when Zaheer bowled the perfect left-armer's outswinger that took the edge. After that it was all a matter of time: both Rangana Herath and Nuwan Kulasekara succumbed to sharp short deliveries from Zaheer. Muttiah Muralitharan scored a quick 14 but edged Harbhajan Singh to MS Dhoni to kick off India's celebrations.
India wrapped up the tail in 7.4 overs to seal a 2-0 series victory that saw them displace South Africa at the top of the test rankings.
Friday, December 4, 2009
Sehwag at 293 short of 7 for a world record third triple-century -India 726-9
Sehwag's 293, a robust 100 not out from skipper Mahendra Singh Dhoni and a string of half-centuries by the middle order fired the hosts to their highest ever total of 726-9 declared in reply to Sri Lanka's 393.
The tourists, trailing by 333 runs on the first innings, were 11-0 in their second knock at stumps on the third day on a wearing track at the Brabourne stadium.
Tharanga Paranavitana and Tillakaratne Dilshan survived three overs of spin before close, but Sri Lanka face a daunting task to avoid defeat over the next two days.
India's total surpassed their previous best of 705-7 declared against Australia at the Sydney cricket ground in January, 2004.
Sehwag had moved from his overnight score of 284 to 293 when he tapped a flighted ball from Muttiah Muralitharan back to the bowler who took the catch on second attempt.
A hush descended at the stadium where some 15,000 home fans had packed the stands anticipating a world record by the swashbuckling opener.
Sehwag returned to a warm applause for his 254-ball effort which was studded with 40 boundaries and seven sixes.
Off-spinner Muralitharan's first success after 21 overs costing 124 runs broke a second-wicket stand of 237 between Sehwag and Rahul Dravid that had lifted India to 458-2.
Sehwag's two triple centuries, matching Australian legend Don Bradman and West Indian great Brian Lara, were 309 against Pakistan in Multan in 2004 and 319 versus South Africa in Chennai last year.
Dravid fell soon after for 74, edging a wild drive off seamer Chanka Welegedara to wicket-keeper Prasanna Jayawardene to make it 487-3.
Dravid, who survived a confident appeal for a catch at the wicket off Rangana Herath earlier in the morning, hit five boundaries and a six.
But Sri Lanka's misery under the hot sun did not end as the famed Indian middle order flexed its muscle to lead a run-riot.
Sachin Tendulkar hit 53, sharing a fourth-wicket stand of 71 with Venkatsai Laxman, when he was bowled by seamer Nuwan Kulasekara soon after lunch.
Laxman chipped in with 62 and Yuvraj Singh made 23, before both were dismissed before tea on a dusty pitch that provided turn to the slow bowlers.
Dhoni dominated the last session with a sparkling century that was achieved with a six off Herath over the mid-wicket boundary.
The Indian captain, who was on 50 when the ninth wicket fell, hit 50 off the last 56 runs in the company of number 11 Pragyan Ojha, who made just five.
Dhoni finished with six sixes and three boundaries, closing the innings as soon as he reached his hundred.
All the four specialist Sri Lankan bowlers conceded over 100 runs with Herath being the most expensive with 3-240 from 53.3 overs. Muralitharan finished with 4-195 from 51 overs.
India lead the three-match series 1-0 after an innings and 144-run victory in the second Test in Kanpur last week
The tourists, trailing by 333 runs on the first innings, were 11-0 in their second knock at stumps on the third day on a wearing track at the Brabourne stadium.
Tharanga Paranavitana and Tillakaratne Dilshan survived three overs of spin before close, but Sri Lanka face a daunting task to avoid defeat over the next two days.
India's total surpassed their previous best of 705-7 declared against Australia at the Sydney cricket ground in January, 2004.
Sehwag had moved from his overnight score of 284 to 293 when he tapped a flighted ball from Muttiah Muralitharan back to the bowler who took the catch on second attempt.
A hush descended at the stadium where some 15,000 home fans had packed the stands anticipating a world record by the swashbuckling opener.
Sehwag returned to a warm applause for his 254-ball effort which was studded with 40 boundaries and seven sixes.
Off-spinner Muralitharan's first success after 21 overs costing 124 runs broke a second-wicket stand of 237 between Sehwag and Rahul Dravid that had lifted India to 458-2.
Sehwag's two triple centuries, matching Australian legend Don Bradman and West Indian great Brian Lara, were 309 against Pakistan in Multan in 2004 and 319 versus South Africa in Chennai last year.
Dravid fell soon after for 74, edging a wild drive off seamer Chanka Welegedara to wicket-keeper Prasanna Jayawardene to make it 487-3.
Dravid, who survived a confident appeal for a catch at the wicket off Rangana Herath earlier in the morning, hit five boundaries and a six.
But Sri Lanka's misery under the hot sun did not end as the famed Indian middle order flexed its muscle to lead a run-riot.
Sachin Tendulkar hit 53, sharing a fourth-wicket stand of 71 with Venkatsai Laxman, when he was bowled by seamer Nuwan Kulasekara soon after lunch.
Laxman chipped in with 62 and Yuvraj Singh made 23, before both were dismissed before tea on a dusty pitch that provided turn to the slow bowlers.
Dhoni dominated the last session with a sparkling century that was achieved with a six off Herath over the mid-wicket boundary.
The Indian captain, who was on 50 when the ninth wicket fell, hit 50 off the last 56 runs in the company of number 11 Pragyan Ojha, who made just five.
Dhoni finished with six sixes and three boundaries, closing the innings as soon as he reached his hundred.
All the four specialist Sri Lankan bowlers conceded over 100 runs with Herath being the most expensive with 3-240 from 53.3 overs. Muralitharan finished with 4-195 from 51 overs.
India lead the three-match series 1-0 after an innings and 144-run victory in the second Test in Kanpur last week
Wednesday, December 2, 2009
India could be a new pole of global growth: World Bank president
Dec 01
Change is the great constant of the world economy. India was still a colony when the allied powers shaped the international architecture at the end of World War Two. Today, India is a rising economic power that is contributing to world growth in new and powerful ways.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise.Economic reforms in India and China, and the export-driven growth strategies of East Asia all contributed in the last 20 years to a world market economy that surged from about 1 billion to 4 or 5 billion people. This shift offers enormous opportunities. But it has also shaken an international economic system forged in the middle of the 20th Century.
The international architecture needs to accommodate India and other powers whose growth rates far exceed those of developed countries. We must recognise this reality and anticipate the future — shape it or be shaped by it.
India is already an indispensable part of the global conversation. Its voice at the G-20 table is an important force for designing a future global architecture, not least because it has well-managed the impact of the economic crisis and is helping support the world’s recovery.
Shifting influence is also reflected in the numbers. As India’s $1.2 trillion economy returns to growth rates of eight to nine per cent, we can expect it to grow not only as a market but as a supplier of a range of services and increasingly knowledge-intensive goods.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise. India’s increasing globalisation will be driven by the country becoming a source for some of these specialised products. As it further integrates with global production chains, it will do so not by making more of the same, but by making products of new value.
Of course, India still faces enormous challenges as a developing country yet if it can remove bottlenecks that slow its economy, then India is well positioned to become one of the new poles of global growth.
India will need innovative financing to move on its massive infrastructure agenda. I hope the World Bank Group can help to attract global partnerships for knowledge and funding. Access to finance is another area where changes will mean a difference to the lives of millions of citizens, that difference being a share in the opportunity of India’s growth.
There are also huge technology advances that India can put to work to make government more efficient, to make service delivery easier to monitor and track, and public financial flows more visible. Half a billion Indians now have cell phones.
This translates into a powerful information flow to — and critically from — some of the remotest and poorest areas.
A sustainable globalisation means an India that shares some of its remarkable achievements more widely. Call it South-South cooperation or good global citizenship, India has much to offer the world: lessons from its model of economic development; cooperation between private and public sectors to generate microeconomic efficiency and macroeconomic stability; working on global financial regulation as part of the G-20 task forces; and considering ways forward on migration and cross-border labour mobility.
Everyone cites India’s Green Revolution. But I’m even more intrigued by what is known as SRI, or system of rice intensification, and I know this is also an area of interest for PM Manmohan Singh. Using smart water management and planting practices, farmers in Tamil Nadu have increased rice yields between 30 and 80 per cent, reduced water use by 30 per cent, and now require significantly less fertilizer. This emerging technology not only addresses food security but also the water scarcity challenge that climate change is making all the more dangerous. These are all lessons for our world.
India’s status as a rising economic power is closely connected with how it can create opportunity and inclusion. It’s not an option to exclude hundreds of millions of Indians from the country’s growing prosperity. One in three of the world’s poor are in India and the country has one of the highest malnutrition rates in the world, with 44 per cent of children born underweight. Actions to address poverty widely — and education, health, rural roads and livelihoods more specifically —have a renewed urgency.
The World Bank Group can support India through assistance with urban development, transport and power infrastructure; elementary and secondary education; and agricultural and rural development. India is now the biggest client for IFC, the group’s private sector arm, with $1 billion a year invested over the last three years. IFC is improving access to infrastructure and finance, and addressing climate change as central to its work. Working together, India and the World Bank Group can become even stronger partners as India rises both at home and abroad.
Change is the great constant of the world economy. India was still a colony when the allied powers shaped the international architecture at the end of World War Two. Today, India is a rising economic power that is contributing to world growth in new and powerful ways.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise.Economic reforms in India and China, and the export-driven growth strategies of East Asia all contributed in the last 20 years to a world market economy that surged from about 1 billion to 4 or 5 billion people. This shift offers enormous opportunities. But it has also shaken an international economic system forged in the middle of the 20th Century.
The international architecture needs to accommodate India and other powers whose growth rates far exceed those of developed countries. We must recognise this reality and anticipate the future — shape it or be shaped by it.
India is already an indispensable part of the global conversation. Its voice at the G-20 table is an important force for designing a future global architecture, not least because it has well-managed the impact of the economic crisis and is helping support the world’s recovery.
Shifting influence is also reflected in the numbers. As India’s $1.2 trillion economy returns to growth rates of eight to nine per cent, we can expect it to grow not only as a market but as a supplier of a range of services and increasingly knowledge-intensive goods.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise. India’s increasing globalisation will be driven by the country becoming a source for some of these specialised products. As it further integrates with global production chains, it will do so not by making more of the same, but by making products of new value.
Of course, India still faces enormous challenges as a developing country yet if it can remove bottlenecks that slow its economy, then India is well positioned to become one of the new poles of global growth.
India will need innovative financing to move on its massive infrastructure agenda. I hope the World Bank Group can help to attract global partnerships for knowledge and funding. Access to finance is another area where changes will mean a difference to the lives of millions of citizens, that difference being a share in the opportunity of India’s growth.
There are also huge technology advances that India can put to work to make government more efficient, to make service delivery easier to monitor and track, and public financial flows more visible. Half a billion Indians now have cell phones.
This translates into a powerful information flow to — and critically from — some of the remotest and poorest areas.
A sustainable globalisation means an India that shares some of its remarkable achievements more widely. Call it South-South cooperation or good global citizenship, India has much to offer the world: lessons from its model of economic development; cooperation between private and public sectors to generate microeconomic efficiency and macroeconomic stability; working on global financial regulation as part of the G-20 task forces; and considering ways forward on migration and cross-border labour mobility.
Everyone cites India’s Green Revolution. But I’m even more intrigued by what is known as SRI, or system of rice intensification, and I know this is also an area of interest for PM Manmohan Singh. Using smart water management and planting practices, farmers in Tamil Nadu have increased rice yields between 30 and 80 per cent, reduced water use by 30 per cent, and now require significantly less fertilizer. This emerging technology not only addresses food security but also the water scarcity challenge that climate change is making all the more dangerous. These are all lessons for our world.
India’s status as a rising economic power is closely connected with how it can create opportunity and inclusion. It’s not an option to exclude hundreds of millions of Indians from the country’s growing prosperity. One in three of the world’s poor are in India and the country has one of the highest malnutrition rates in the world, with 44 per cent of children born underweight. Actions to address poverty widely — and education, health, rural roads and livelihoods more specifically —have a renewed urgency.
The World Bank Group can support India through assistance with urban development, transport and power infrastructure; elementary and secondary education; and agricultural and rural development. India is now the biggest client for IFC, the group’s private sector arm, with $1 billion a year invested over the last three years. IFC is improving access to infrastructure and finance, and addressing climate change as central to its work. Working together, India and the World Bank Group can become even stronger partners as India rises both at home and abroad.
Dubai tourism already pressured by the global economic downturn
Nov. 30, 2009,
With its massive residential, commercial and leisure developments built on oil revenue (and, as it turns out, a foundation of shaky debt), Dubai has been steadily modeling itself for more than a decade into an upscale tourist destination and a regional entrepot for those people and companies looking to do business in the Persian Gulf region.
Already pressured by the global economic downturn, its success could be in further danger as Dubai World, the emirate's investment and holding arm, teeters on the edge of defaulting on $60 billion worth of debt. Those IOUs piled up during its relentless expansion of domestic and foreign investments, largely in real estate.
Dubai Will Hang Over Market SentimentDubai's debt problem may be small in the greater scale of things but it could still have ramifications for how other sovereign-related debt is treated and cap any recovery in global risk appetite.
In addition to major projects on its home turf, Dubai World owns about 6% of the outstanding shares of casino giant MGM Mirage and a half stake in that company's CityCenter project -- an $8 billion-plus mixed-use development on the Las Vegas Strip. At one point earlier this year, the partners were busily suing each other over Dubai's World financial obligations to get the project finished, an early sign of the country's troubles.
All was eventually settled amicably with CityCenter being fully funded and on track to open its first phase next month. On Monday, Jim Murren, chief executive of MGM Mirage, acknowledged the company has "no financial exposure" to Dubai World's troubles and noted the partners negotiated a cross-default provision as part of the agreement.
Global aspirations
Long an island of peace and prosperity in a volatile region, the relatively laid-back emirate has had considerable success attracting visitors drawn by everything from its world-class horse races (sans gambling) and an indoor ski slope to the chance to buy into "the World" -- a development of 300 man-made islands arranged roughly in the shape of the seven continents.
Its government takes a far more relaxed approach to recreation than most of its neighbors, with alcohol freely available and beach attire common. There are no cane-wielding clerics patrolling the streets, and while it is far from say, New Orleans when it comes to atmosphere, it is practically Gomorrah compared with other nations in the region, like Saudi Arabia and Iran.
That has attracted both homegrown and international chains to build out thousands of rooms, with Hilton Hotels, Starwood Hotels & Resorts Worldwide Inc. , Hyatt Hotels Corp. , Intercontinental Hotels Group PLC and Marriott International Inc among the companies boasting branded properties there.
By some measures, things have held together relatively well during the recession. Tourist arrivals to Dubai were up 5% through the first half of 2009, largely on the back of slashed hotel rates and an aggressive marketing campaign. Its Department of Tourism and Commerce Marketing said 3.85 million visitors came in the first half of the year. In contrast, 10 years ago Dubai had about 3 million visitors annually; 20 years ago, it was barely 600,000.
Dubai World
However, while the total number of guests staying at hotels is up so far this year, a glut of new supply has dragged down average occupancy to less than 70% from the more than 87% experienced between January and June last year, according to a survey by STR Global.
Dubai ended the first half with about 58,000 hotel rooms, an increase of 17%, and thousands more are due to enter the pipeline in the next few years. (Las Vegas, which also is suffering in the downturn, has just more than twice as many hotel rooms but about five times as many annual visitors.)
Worse, revenue per available room, a key industry metric known as RevPAR, fell by 36% just last month, STR said, as rates were slashed. A cursory check of online-travel sites will turn up four- and even five-star hotel properties offering accommodations for as little as $100 a night.
Those drops are taking a toll even as oil prices stay near the $80 mark. Unlike some of the other emirates like Abu Dhabi, Dubai gets just 6% of its revenue from oil and gas. Production peaked in the early 1990s, the same time it began marketing itself as a commercial center and began a building boom that continued until the bottom fell out of the global real-estate markets last year.
"There was lot of development, a lot of high-end hotels and retailers moving in, trying to make Dubai a luxury destination," said Michelle Chang, an analyst with Morningstar. "The downturn put a damper on that."
Longer term, the prospects for a rebound "are hard to say, but in the near term, the added capacity is likely to put added pressures on all the operators," she elaborated.
Globally, with capacity growth slowing down, Chang added that "generally speaking for 2010, we are expecting occupancy to stabilize but room rates to remain fairly depressed."
Market watch Reports
With its massive residential, commercial and leisure developments built on oil revenue (and, as it turns out, a foundation of shaky debt), Dubai has been steadily modeling itself for more than a decade into an upscale tourist destination and a regional entrepot for those people and companies looking to do business in the Persian Gulf region.
Already pressured by the global economic downturn, its success could be in further danger as Dubai World, the emirate's investment and holding arm, teeters on the edge of defaulting on $60 billion worth of debt. Those IOUs piled up during its relentless expansion of domestic and foreign investments, largely in real estate.
Dubai Will Hang Over Market SentimentDubai's debt problem may be small in the greater scale of things but it could still have ramifications for how other sovereign-related debt is treated and cap any recovery in global risk appetite.
In addition to major projects on its home turf, Dubai World owns about 6% of the outstanding shares of casino giant MGM Mirage and a half stake in that company's CityCenter project -- an $8 billion-plus mixed-use development on the Las Vegas Strip. At one point earlier this year, the partners were busily suing each other over Dubai's World financial obligations to get the project finished, an early sign of the country's troubles.
All was eventually settled amicably with CityCenter being fully funded and on track to open its first phase next month. On Monday, Jim Murren, chief executive of MGM Mirage, acknowledged the company has "no financial exposure" to Dubai World's troubles and noted the partners negotiated a cross-default provision as part of the agreement.
Global aspirations
Long an island of peace and prosperity in a volatile region, the relatively laid-back emirate has had considerable success attracting visitors drawn by everything from its world-class horse races (sans gambling) and an indoor ski slope to the chance to buy into "the World" -- a development of 300 man-made islands arranged roughly in the shape of the seven continents.
Its government takes a far more relaxed approach to recreation than most of its neighbors, with alcohol freely available and beach attire common. There are no cane-wielding clerics patrolling the streets, and while it is far from say, New Orleans when it comes to atmosphere, it is practically Gomorrah compared with other nations in the region, like Saudi Arabia and Iran.
That has attracted both homegrown and international chains to build out thousands of rooms, with Hilton Hotels, Starwood Hotels & Resorts Worldwide Inc. , Hyatt Hotels Corp. , Intercontinental Hotels Group PLC and Marriott International Inc among the companies boasting branded properties there.
By some measures, things have held together relatively well during the recession. Tourist arrivals to Dubai were up 5% through the first half of 2009, largely on the back of slashed hotel rates and an aggressive marketing campaign. Its Department of Tourism and Commerce Marketing said 3.85 million visitors came in the first half of the year. In contrast, 10 years ago Dubai had about 3 million visitors annually; 20 years ago, it was barely 600,000.
Dubai World
However, while the total number of guests staying at hotels is up so far this year, a glut of new supply has dragged down average occupancy to less than 70% from the more than 87% experienced between January and June last year, according to a survey by STR Global.
Dubai ended the first half with about 58,000 hotel rooms, an increase of 17%, and thousands more are due to enter the pipeline in the next few years. (Las Vegas, which also is suffering in the downturn, has just more than twice as many hotel rooms but about five times as many annual visitors.)
Worse, revenue per available room, a key industry metric known as RevPAR, fell by 36% just last month, STR said, as rates were slashed. A cursory check of online-travel sites will turn up four- and even five-star hotel properties offering accommodations for as little as $100 a night.
Those drops are taking a toll even as oil prices stay near the $80 mark. Unlike some of the other emirates like Abu Dhabi, Dubai gets just 6% of its revenue from oil and gas. Production peaked in the early 1990s, the same time it began marketing itself as a commercial center and began a building boom that continued until the bottom fell out of the global real-estate markets last year.
"There was lot of development, a lot of high-end hotels and retailers moving in, trying to make Dubai a luxury destination," said Michelle Chang, an analyst with Morningstar. "The downturn put a damper on that."
Longer term, the prospects for a rebound "are hard to say, but in the near term, the added capacity is likely to put added pressures on all the operators," she elaborated.
Globally, with capacity growth slowing down, Chang added that "generally speaking for 2010, we are expecting occupancy to stabilize but room rates to remain fairly depressed."
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