Hospitality prospects remain intact

The UAE hospitality industry will rebound this year with occupancy going up across the board following a dismal 2020 due to the Covid-19 pandemic as the long-term outlook for the sector remains intact, say analysts.

However, they warned that the hoteliers need to expand their revenues streams, especially the small-and-mid-tier operators, to survive in the market getting tougher due to cut-throat competition in the market.

Since the UAE hotel sector’s long-term outlook remains intact, analysts believe that investments into hospitality sector will not be affected by the short-term impact of the pandemic on the sector.

It’s believed that the slower recovery of tourism will also pose a challenge for the local hoteliers. Though the vaccine is being rolled out at an exceptionally fast pace in the UAE, most of the other countries still lag behind in their vaccine inoculation, which will play a key role in the post-pandemic recovery of the sector.

“Despite the drive to inoculate the global population, we are still not expecting tourism being able to return in a meaningful manner until the latter part of 2022. This is despite the UAE’s commendable handling of the pandemic, the establishment of air-bridges and its relatively agreeable weather for most parts of the year,” says Taimur Khan, associate partner at  Knight Frank in Dubai.

“Despite challenging market conditions, asset owners understand that this is a short-term shock, rather a long term structural change to the market.”

As a result, given the sector’s favourable long term outlook and investors’ extended investment horizons, where investment decisions are more closely correlated with the longer-term outlook, investment in the sector will remain steadfast,” Khan said.

2020 was the year of staycations as hotels looked to ramp up domestic tourism in the absence of overseas visitors. Hotels launched innovative campaigns at attractive prices including offering rates that included dining, free upgrades and free cancellations.

Global consultancy Colliers foresees hotel occupancy rising across the board in all the emirates. It sees 61 per cent surge in occupancy in Dubai Creek/Festival City; 63 per cent in Sheikh Zayed Road/DIFC, 64 per cent at Palm Jumeirah properties; 44 per cent rise in Dubai Marina/JBR, 16 per cent rise in Abu Dhabi beach, 38 per cent rise in Ras Al Khaimah beach hotels, 23 per cent increase in Sharjah hotels and seven per cent across Fujairah hoteliers.