Av­er­age room rates drop in Dubai, Abu Dhabi

The Pak Banker - - BUSINESS -

Abu Dhabi and Dubai's ho­tels saw a drop in rev­enue per avail­able room or RevPAR in Jan­uary 2016.

Abu Dhabi's emerg­ing mar­ket which has 151 prop­er­ties wit­nessed a drop of 15 per cent year-on-year, while Dubai rev­enues fell 9.3 per cent in Jan­uary when com­pared with the same month a year ago.

"Ho­tels in Abu Dhabi and Dubai no­ticed a drop in KPI's due to sev­eral fac­tors such as ad­di­tional room sup­ply, gen­eral macro-eco­nomic con­di­tions cou­pled with the drop in the Euro mak­ing it more ex­pen­sive for trav­el­ers from Europe and re­duced visi­ta­tion from Rus­sia due to the sig­nif­i­cant de­val­u­a­tion of their lo­cal cur­rency to the low­est level ever," said Ernest & Young in its lat­est Middle East ho­tel bench­mark sur­vey.

Yousef Wah­bah, Mena head of trans­ac­tion real es­tate at EY said that the hos­pi­tal­ity mar­kets across Mena wit­nessed a less than ideal per­for­mance in 2015 when com­pared to pre­vi­ous year. While oc­cu­pancy rates surged across some mar­kets in 2015 such as Cairo, holy city of Mad­i­nah, Mus­cat and Ras Al Khaimah, rev­enue per avail­able room across most Mena mar­kets was lower com­pared to 2014.

Dubai beach ho­tels and Jed­dah ho­tels had the high­est room yields in Mena, record­ing an av­er­age of $311 and $214 re­spec­tively in 2015. De­spite the de­crease in rev­enue per avail­able room, mar­kets such as Dubai, Abu Dhabi and Ras Al Khaimah, which saw an in­flux of new in­ter­na­tional ho­tel chains in 2015, recorded very im­pres­sive per­for­mance in­di­ca­tors.

Dubai and Abu Dhabi main­tained the high­est oc­cu­pancy rates in the re­gion in 2015 at 80 per cent, fol­lowed closely by Ras Al Khaimah at 75 per cent, com­pet­ing with the high oc­cu­pancy rates of cities such as Lon­don, New York and Tokyo. The de­mand for Dubai beach ho­tels has al­ways out­stripped sup­ply and it is ex­pected that this trend will con­tinue. In terms of city ho­tels, com­pe­ti­tion is grow­ing, as an in­creas­ing num­ber of four and three-star prop­er­ties are un­der­way.

The mar­ket share of this tier of ho­tels has been in­creas­ing over the three years, prov­ing to be a re­silient cat­e­gory of ho­tels dur­ing down­turns. Ho­tel own­ers as now see­ing three and four star ho­tels as a worth­while in­vest­ment al­ter­na­tive to five-star ho­tels. Giv­ing his take on the sit­u­a­tion, Adeeb Ahamed, man­ag­ing di­rec­tor of Abu Dhabi-based hos­pi­tal­ity com­pany Twenty14 Hold­ings said "a num­ber of fac­tors comes into play when tak­ing into con­sid­er­a­tion the room rates, in­clud­ing the tourist in­flow, pur­chas­ing power and even sup­ply of ho­tel rooms. "

"Al­though new in­ter­na­tional chains have en­tered the mar­ket, we be­lieve that Dubai is still a ro­bust mar­ket for the hos­pi­tal­ity in­dus­try, and the per­for­mances will be on par with the pre­vi­ous year," the man­ag­ing di­rec­tor said. DTCM for their part has aimed at at­tract 20 mil­lion vis­i­tors to Dubai by 2020, and the hos­pi­tal­ity in­dus­try is on good track to cre­at­ing ac­com­mo­da­tion for the tourists, Adeeb Ahamed said. The same trend of three and four star prop­er­ties has also been seen in Saudi Ara­bia. Look­ing to Doha, the city has been try­ing to re­verse the trend of be­ing an ex­pen­sive desti­na­tion rel­a­tive to other cities in the GCC with high av­er­age daily rate (ADR) and low oc­cu­pancy rates.

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