More rooms than vis­i­tors

Ho­tels strug­gle as mar­ket floods

7 Days in Dubai - - NEWS - By Shoshana Ke­dem @B_shosh shoshana@7days.ae

Dubai ho­tels are strug­gling to fill rooms as sup­ply is out­stripped by de­mand from vis­i­tors, ac­cord­ing to new re­search.

STR Global, the data re­search firm, said a 3.9 per cent in­crease in de­mand from guests was out­matched by a 6 per cent in­crease in the num­ber of new ho­tel rooms.

The firm’s com­par­i­son of fig­ures for Oc­to­ber 2015 and Oc­to­ber 2016 also found oc­cu­pancy rates dropped by 2 per cent to 77 per cent – the low­est rate in that month since 2011.

“Even though de­mand is grow­ing, it has not kept pace with sup­ply,” an STR an­a­lyst told 7DAYS.

Rev­enues per avail­able ho­tel room – known as Rev PAR – also slipped 12 per cent to Dhs598.09 ($162.83).

This means bad news for hote­liers but a boost for vis­i­tors.

“Dubai has been an ex­tremely hot potato for so long that it’s not sur­pris­ing to see that it’s cooled off after a while,” the STR an­a­lyst said.

“Though Dubai is not as oil de­pen­dent as other Mid­dle East­ern key mar­kets like Abu Dhabi, Doha and Manama, that has had a huge ef­fect on the re­gion and could have spilled over for Dubai. Dubai was one very ex­pen­sive des­tina- tion, and if you want to keep at­tract­ing cus­tomers it has to come to the point where you find a bal­ance, and this is what’s hap­pen­ing now. With the lower prices a dif­fer­ent plethora of tourists are com­ing to Dubai.”

STR said oc­cu­pancy rates would con­tinue to drop while ho­tel rates could be ex­pect to fall fur­ther.

STR said: “Over­all oc­cu­pancy is prob­a­bly go­ing to stay be­cause de­mand con­tin­ues to grow.

“It will come to a point where the drop in rate will prob­a­bly not be sus­tain­able any­more and there’ll be a re­turn to growth, but when that will hap­pen is im­pos­si­ble to say.”

De­spite the cur­rent sur­plus, many ho­tel groups will be ex­pand­ing in an­tic­i­pa­tion of Expo 2020, when 25 mil­lion vis­i­tors are ex­pected over six months.

STR also noted: “The 70 per cent oc­cu­pancy is quite high when you look at oc­cu­pancy across the globe.”

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