Dubai hotels see fall in rates

Occupancy in Dubai hotels remained stable in September at 76.6 per cent, marginally lower than the same period last year.

Dubai - Occupancy levels of Dubai hotels remained stable, albeit marginally lower than the same period last year.

Issac John

Published: Tue 3 Nov 2015, 9:24 PM

Five and four star hotels in Dubai continued to experience weakening average room rates in September, falling 2.3 per cent to $207.55.
Occupancy levels of Dubai hotels remained stable, albeit marginally lower than the same period last year at 76.6 per cent, according to the latest HotStats Mena Chain Hotels Market Review.
The report said the reduction in revenue per available room (RevPAR) was compounded by significantly lower food and beverage revenues which fell 19 per cent, driving total revenue per available room (TRevPAR) 8.1 per cent lower to $282.55. "Slightly higher operating expenses compounded the lower overall revenues, reducing gross operating profit per available room [Goppar] by 8.7 per cent to $84.66," it said.
According to data provided by STR Global, hotels operating in Dubai posted decreases in revenues and rates in September. Based on daily data from September, Dubai reported a 0.3 per cent decrease in occupancy to 76.1 per cent compared to the same month last year.
Dubai's hotel room supply was 369 hotels in July 2015 which reflects a compound average growth rate of 5.25 per cent from the 233 hotels in 2006. Over this period, the number of rooms in Dubai rose from 39,000 (2006) across all sectors of the market to 75,600 in July 2015.
Growth in demand for hotel accommodation in Dubai has slowed in 2015 compared to 2014, with growth of 5.1 per cent versus 6.4 per cent in 2014. The rise in the supply of hotel accommodation over the same period has outpaced demand growth with 6.7 per cent growth in 2015.
STR Global said in its report that this mismatch in hotel supply growth and demand growth has resulted in occupancy declining by a relatively modest 1.3 per cent. Average daily rates are, as a result, also lower but these more competitive room rates are necessary to drive tourism volume growth which is clearly the long term focus for Dubai.
HotStats said although Kuwait generally benefits from increased demand during the Eid Al Adha holiday period due to its proximity to Saudi Arabia, the market saw demand levels fall in September, with occupancy dropping 8.5 percentage points to 42.6 per cent. The lower demand is more heavily linked to softer activity from the government and corporate markets which is slowing due to the lower oil prices.
"The fall in demand had a negative impact on all remaining performance indicators with ARR and RevPAR dropping 0.7 per cent and 17.2 per cent respectively. Lower F&B demand compounded the softer room revenue and resulted in Goppar reducing 14.6 per cent to $100.02," HotStats said.
Four and five star hotels in Manama benefited from the extended Eid Al Adha holiday, with the market witnessing a 4.3 percentage point increase in occupancy to 60.7 per cent. The influx of regional visitors, particularly from Saudi Arabia, allowed hoteliers to generate a 7.3 per cent increase in ARR to $202.26. The increase in both occupancy and ARR fuelled growth in all performance indicators, with TRevPAR increasing 10.1 per cent to $185.31 and Goppar expanding 18.1 per cent to $67.9, HotStats said. - issacjohn@khaleejtimes.com